All of the loans we make are collateralized by diamonds or diamond jewelry. Diamond loans are the only type of loan we make. That means that if you are able to use your diamonds or diamond jewelry as collateral, we are able to make a loan to you. Since most of our customers are individuals, the diamonds tendered are usually mounted in rings, pendants, earrings or bracelets.
In other words, we take as collateral the diamond jewelry that ordinary people own for the usual reasons of engagement, wedding and fashion, and enable them to borrow money based on the value of that jewelry in secondary markets. The amount of the loan is based solely on the value of the diamond jewelry.
It does not matter to us why you want to borrow money. We usually do not ask, but do reserve the right to do so if the situation warrants it.
The Steps for Getting A Loan at the Hull Loan System
To obtain a diamond jewelry loan, you may tender your diamond(s) either in person or by mail. Diamonds may be either mounted or loose. Mounted diamonds are never unmounted unless the customer so requests. Diamonds are tested with synthetic, thermal and moissanite testers; measured and weighed (if loose); checked for lasering, fracture filling and florescence; graded for color, clarity and cut; and then assigned a loan value based on the Rapaport Diamond Report.
All diamonds tendered as collateral must be owned free and clear of any encumbrance by the applicant. The applicant will be asked to sign an affidavit certifying that they are so owned. We will accept no diamonds as collateral which are in the applicant’s possession by virtue of loan or memo from another firm or the purchase of which is still being financed by a retail store.
Don’t hesitate to call us if you need fast cash. At Hull Loan System, professional and prompt service is the most important aspect of our business. We offer a unique, professional and personal service for every customer seeking a diamond jewelry loan.
We set loan values equal to 80% of what we think the collateral will sell for at auction or in other secondary, interdealer markets. The reason for setting loan values at this level is that, in the event of a default on a loan, the fastest and easiest way for us to recover what we have loaned out is to sell the collateral either at auction or to another dealer. Generally, this means that loan values are set at 40% of the Rapaport Diamond Report list price (60 back). Adjustments are made to these values as the cut characteristics dictate.
We operate as a Chapter 56 Regulated Lender under Minnesota state law. As such, the interest rates we charge are established in state law. They are: 33% per year on the first $1275 loaned and 19% on any amount above that. The effective rate is therefore a weighted average of those two rates. The effective rate decreases as the the loan amount increases above $1275. It bottoms out at 21.75% per year. There is also a nonrefundable $25 fee for making the loan on all loans up to $7344.
It is important to emphasize that these rates are per year. The only other place where a loan can be obtained upon the tender of a diamond is a pawn shop, which will quote rates per month. Our interest rates are roughly 1/12th the rates charged by pawn shops.
We do not check the credit records of customers, nor do we report to any credit bureau. Our decision to make the loan and the size of the loan is based mostly on the value of the collateral. We may ask for proof of ownership in certain cases, and we reserve the right to decline in any case where we suspect the applicant is not the owner of the collateral.
Loans are completed and checks are issued on the same day collateral is tendered if done so in person. The process usually takes about an hour but can take longer if there are multiple pieces or diamonds to appraise. When the collateral is tendered by mail (usually FedEx overnight delivery), funds are normally directly deposited into the customer’s bank account either by wire transfer if the funds are needed on the same day or by ACH transfer for next day deposit. A loan contract is mailed or emailed and the customer signs and returns it to us.
At the time we take possession of the diamond collateral, it is sealed in a coin envelope in the presence of the customer; the customer then signs or initials across the seals of the envelope; and we then tape over the initials or signature. By following this procedure, the customer is able to see when he or she comes back to redeem the collateral that it has not been tampered with.
All diamonds are then stored for safekeeping in a safe deposit vault in the US Bank in downtown Minneapolis. No diamonds are stored in our office. Your diamonds are safer with us than in your own home.
We make loans for any period of time up to five years in length. The term chosen is determined by the size of the loan and the monthly payment the customer is comfortable with. The monthly payments required will pay the loan in full in whatever period of time is chosen. There is no penalty for prepayment. The loan may be paid off whenever the customer wants to pay off and can afford to do so, and he or she will be charged the simple interest for only the exact number of days for which the money was borrowed. Monthly payments may be made in person at our office in Minneapolis or by mail for small loans. Payments for large loans are required to be made by ACH automatic payment.
This is a difficult question to answer. Some 1/4 carat diamonds will collateralize our smallest loan (which is $100) and some do not. However, we frequently take in as collateral cluster-style rings and diamond line bracelets with many diamonds smaller than 1/4 carat which will collateralize loans of hundreds and even thousands of dollars. Please call us and let us know what you have.
Our most direct competitors are the pawn shops. The pawn shops are the only other place where you can obtain a loan by tendering a diamond as collateral. But, as a regulated lender, our loan program is much cheaper for the customer than is a pawn. The regulated interest rates we charge are roughly 1/12th of what you will pay at a pawn shop. We also give you much longer periods of time to pay back your loan. Generally, we offer you more money than the pawn shops will. And, finally, you have the assurance of knowing that, as a regulated lender, we are audited and examined by the Minnesota Department of Commerce at least once every two years for compliance with the consumer protection provisions of the Minnesota Regulated Lenders Act. We pass these audits with flying colors.
We operate as a Chapter 56 Regulated Lender under Minnesota state law. That means that the maximum fee and interest rates we are allowed to charge are set by state law. It also means that we are audited and examined by the Minnesota Department of Commerce at least once every two years for compliance with the consumer protections of the Minnesota Regulated Lenders Act. Please feel free to call the Financial Examinations Division of the Department of Commerce at (651) 296-4026 if you have questions for our regulators about our company.
We do ask that you call us to make an appointment if you would like to come in for a loan or to buy a diamond. We can almost always accommodate you on the same day, especially if you call early in the day. We would hate to see you come in without an appointment and have to wait a long time or come back another time because we are busy with other customers. Please call us at (612) 333-6726.
