[Dpeck100]

This is such a complicated topic in reality. I work in financial services and there are quite a few clients that borrow against their securities positions using them as collateral and not in the form of a margin account but an asset backed line that is LIBOR plus 0.50 up to 2.25%. There are different advance rates on different securities and some that don't qualify at all. The advance rates are driven by liquidity and by the implied volatility of the asset class. If this was to be successful you would need to limit it to the most liquid cards because trading cards can be inherently volatile and using a lower advance rate for loans lasting more than a few months. Imagine a one off sale of an auction going for much lower than the VCP average and triggering a margin call. Or worse yet using data from a few years ago where many cards collapsed from record selling prices and once more triggering a margin call. The interest rates you quoted are on the high side and obviously due to the risk associated with this scenario. I have over 50k in graded cards and If I needed to borrow 25k I would use other avenues. I really hope this doesn't become a popular form of lending for hobby participants because if there is a downturn this could exacerbate it significantly. The reason banks and broker dealers will lend against securities is the ones they choose are liquid and can be sold quickly. Just imagine if a margin clerk said we are calling this loan and then simply auctioned your cards off with limited notice and if there was a few hobbyist getting called at the same time the cards in question could sink significantly and cause a cascading event. Another big issue would be if these same collectors are using the funds to buy more cards their risk has increased significantly making it harder to pay back and potentially driving up card values in the short run and making their new entry points at higher levels and amplifying the risk in the card market. Where I do think this is reasonable is for very short term loans. For example if you are auctioning off cards in a month or two and want an advance to purchase something that comes up and the lender has your cards as collateral lined up for sale then it becomes more of a bridge loan and doesn't create the issues I mentioned above.