How does collateral for loans work in practice?


(Mangeiri Fageras) #1

How does it actually work when people set up collateral for loans? What is the actual step by step process? Assuming it is with a third party, who are common third party people used for this service?


(Sabriz Adoudel) #2

Example without third party:

I contract you 10000 Light Neutron Blaster II in exchange for 7 200 000 000 ISK.

I then make my agreed interest payments, then when we are ready to close the loan you contract me the goods back for principal + 1 month of interest.

Risk: If LNB2s explode in price you might sell them without honoring your end of the deal. If LNB2s collapse in price, you have no leverage if I cease repayments. If you get hit by a bus, I won’t see the collateral back either.

This is still generally the best way to handle <25b loans unless there is active distrust between the parties.


Example with 3rd party:

I contract 10000 LNB2s to Chribbba, Elizabeth Norn, James 315 or another trusted EVE personality.

You donate the ISK to the 3rd party, plus pay their service fee (which is generally low). They disburse the funds to me.

If I live up to the loan terms, I repay the 3rd party and they release the collateral. If I default, the third party releases the collateral to the lender instead.

Here there is more fraud risk, but it is centred in a player that has (ideally) brokered much larger loans in the past. In practice this makes it a safer way to handle any loans exceeding 25b.


(Keno Skir) #3

Is James a trusted third party or was that a joke that went over my head?


(Tiddle Jr) #4

100% trusted for all miners at High Sec.


(Keno Skir) #5

Didn’t think so. When you want a banker you don’t ask an entertainer.


(Geo Eclipse Oksaras) #6

I was considering getting in on offering to be a 3rd party. I’m not apart of any huge alliance, tend to stick to myself and run hisec l4s. Been around for 7 yrs off and on. Just looking for something different to do.


(Elizabeth Norn) #8

https://forums-archive.eveonline.com/topic/358639/

Some wise words from Grendell about becoming a third party.


(Keno Skir) #10

People have to trust you. Meaning you have to have some background and a long history of not screwing anyone over. It’s not something you “get into”, rather something you fall into because a lot of people trust you implicitly.


(Krysenth) #12

Not… exactly a ringing endorsement in your favor.

The reason people like chribba and enorn are able to be trusted 3rd parties is because they’ve previously handled large sums of money (enorn’s handled upwards of 1 trillion isk iirc) successfully and earned trust.


(Solonius Rex) #13

Im part of the imperium and ive never heard of you.


(Solonius Rex) #15

Was expecting a “the Mittani knows me” post, left dissapointed.


(Geo Eclipse Oksaras) #16

Actually not mittani. It’s a few from Black Aces that I know. I know it would have taken forever for anyone to build any kind of trust in me to do this. So I decided earlier to back out of my venture into this. I actually was a part of black aces for a few months.


(Vaerah Vahrokha) #17

Here is a quite detailed tutorial written by me, about how a collateralized loan / 3rd party service works.

Feel free to browse that website, it contains a lot of “meta EvE game” information!


(system) #18

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