Borrowing Against Wealth: How Rich People Get Cash Without Selling Assets

Imagine you’re sitting on a pile of stocks or real estate, but you need cash—fast. Most people would just sell something. That’s not how the rich play the game. They borrow against their stuff and keep it growing while getting the cash they want. Sounds too good to be true? It’s actually pretty straightforward once you see how it works.

Instead of cashing out, wealthy folks use their investments as collateral. So, a banker might offer a low-interest loan if you let them hold your shares or property as backup. You get the cash, your assets keep working for you, and if the value goes up, you win twice. Even better: you usually pay way less in interest than you would on a regular personal loan.

The secret sauce here is using things like stocks, bonds, real estate—even art—as the backing for these loans. Because there’s real value behind the loan, banks see it as less risky. That means lower rates and bigger borrowing power. Plus, since you’re not selling, you dodge capital gains taxes for now, and you stay invested for the long run.

• Why Do the Wealthy Borrow Instead of Sell?
• Types of Assets Used as Collateral
• Popular Borrowing Methods: Margin Loans, Lines of Credit, and More
• What Makes Their Interest Rates So Low?
• Risks and Handy Tips for Borrowing Against Assets

Why Do the Wealthy Borrow Instead of Sell?

Here’s something most folks miss: selling big assets like stocks usually comes with a hefty tax bill. When rich people sell investments that have gone up in value, they have to pay capital gains tax—sometimes over 20%. Instead, they borrow against those assets, keep them in place, and avoid triggering those taxes right away. It’s a way to access money now and deal with taxes later—or sometimes, never, if they leave those assets to their kids, who can get what’s called a "step-up in basis" for taxes.

Another reason is growth. If your investments are making money—like stocks churning out 8% returns—but you only pay 4% on a loan, you’re coming out ahead. The rich can grab low personal loan rates by using their assets as security, and their wealth keeps working for them in the background. Imagine getting the cash you want, but your money keeps compounding quietly while you do it.

• Better loan terms: Banks love lending to people with big collateral because there’s less risk. So, the wealthy often get lower interest rates compared to standard personal loans.
• No missing out on future gains: Selling means you’re out of the game if your stocks or property shoot up. Borrowing lets you stay invested.
• More spending flexibility: The rich use borrowed cash for anything—big purchases, investments, or just having extra liquidity on hand.

Here’s a quick look at how this stacks up:

This is why you see the super-rich, from Elon Musk to everyday millionaires, using loans backed by their investments. It’s about keeping more of what they earn, using banks to their advantage, and making sure their money keeps stacking up over time.

Types of Assets Used as Collateral

Rich people don’t just stick to cash or savings accounts for borrowing. They rely on personal loan rates tied to assets banks believe are solid and easy to value. The point? You want stuff that’s worth a lot, won’t tank overnight, and is simple for a lender to take if things go south.

Here are the favorites—and why they matter:

• Stocks and Bonds: These are the easiest for banks to accept. If you’ve got a healthy brokerage account, you can set up a margin loan or securities-backed line of credit in days. Lenders love them because they can be liquidated fast if needed. For example, some banks let you borrow up to 70% of a blue-chip stock’s value.
• Real Estate: Think high-end homes, condos, or even commercial property. These are used for home equity loans or lines of credit (HELOCs). Real estate gives you bigger dollar amounts and longer loan terms, but the paperwork takes longer and appraisals are a must.
• Art, Jewelry, and Collectibles: If you’ve got a Picasso or a stash of luxury watches, certain lenders will take those as collateral. Deals like this are more niche—rates depend on how easily the item can be sold if needed, and you’ll usually pay for expert appraisals.
• Private Business Interests: Founders or owners can use their stake in a profitable business as collateral, though these loans take some digging into financials. Family offices and specialty lenders are into this game.

Securities-backed lending is getting more common each year, especially at private banks. In 2023, the global market for securities-backed loans hit over $600 billion, showing just how much the wealthy lean on these tools—especially when rates are low and personal loan rates can be unpredictable.

The big takeaway? If the asset is valuable and lenders can easily turn it into cash, there’s a good shot you can borrow against it—and usually at lower personal loan rates than a standard unsecured loan offers.

Popular Borrowing Methods: Margin Loans, Lines of Credit, and More

Wealthy folks have a toolkit for getting cash without touching their actual stash. Here’s what’s actually in play when they borrow against their money:

• Margin loans: This is classic Wall Street. You hand over your stocks as collateral, and the broker lets you borrow anywhere from 50% to 70% of their value. Rates are often way below those on regular personal loans—sometimes as low as 5% compared to over 10% for many personal loan rates. If your portfolio dips big time, you might get a margin call and need to pay up or sell.
• Securities-backed lines of credit (SBLOCs): These work like credit cards backed by your investment account. Let’s say you’ve got $1 million in stocks. A lender might let you borrow up to $650,000 at a pretty sweet rate, sometimes 4% or even less. You only pay interest on what you use—super flexible and usually with fewer hoops to jump through than regular loans.
• Home equity lines of credit (HELOCs): Got a pricey house? Use it as collateral. A HELOC lets you borrow based on the value of your home, like a gigantic credit card against your equity. Interest rates can be really low, especially with good credit. Bonus: The interest may be tax-deductible if you use it for home improvements.
• Art and collectible-backed loans: Some banks lend big against art, vintage cars, or jewelry. The value gets appraised, and you might get up to 50% of what the item is worth at interest rates surprisingly close to what you’d get with investments or real estate.
• Private bank loans: Ultra-rich clients (think $10 million and up) often get custom deals from private banks. Here, nearly any valuable asset—yachts, patents, you name it—can be used for a bespoke loan package, usually with rock-bottom rates and personal service all the way.

Here’s a quick snapshot of how rates compare with average personal loan rates as of April 2025:

So why pay nearly double with personal loan rates when a good portfolio or property can unlock so much more? The catch is you need to already own valuable stuff to play this game, but that’s exactly how the rich stay rich—and always have fast access to cash when opportunity knocks.

What Makes Their Interest Rates So Low?

Here’s where things get interesting. When the rich borrow against stuff like stocks, real estate, or expensive art, they’re offering the bank some serious backup—the fancy word is “collateral.” Since the lender knows there’s a valuable asset as security, the risk drops a lot. That’s a big reason why rates are lower compared to your typical personal loan rates that most people deal with.

If you walk into a bank asking for a regular unsecured personal loan, they only have your promise to pay it back. That means higher risk for them, and they cover their bases by jacking up the interest rate. With asset-backed loans, like margin loans (based on your stocks) or securities-backed lines of credit, banks can claim your assets if you don’t pay. So, they’re a lot more chill about the deal—and pass the savings onto you through lower rates.

Check out these real-world numbers. As of 2024, margin loan rates for people with large brokerage accounts often hover between 6% and 8%, sometimes even lower if you have millions in your account. By comparison, average unsecured personal loan rates in the U.S. usually float around 11% to 14% or even higher, according to the Federal Reserve. That’s a big gap, and it adds up fast for loans in the six or seven figures.

Another factor is the relationship between wealthy clients and their banks or brokerage firms. If you’ve got millions parked at a bank, you can bet you’ll get even better personal loan rates than the average customer. Private bankers like to keep these clients happy, so they often cut deals or offer special loan packages tailored to their asset levels. The more you have, the sweeter the rate.

There’s also less paperwork and fewer hoops to jump through when big assets are involved. Banks want rich clients, so they make the process quick and painless. All this adds up to super-competitive interest rates you just won’t see with a regular unsecured loan.

Risks and Handy Tips for Borrowing Against Assets

Borrowing against your assets sounds like a cheat code, but it’s not foolproof. There are some serious risks you’ll want to keep in mind if you go this route—whether you’re working with personal loan rates or something tailored for the wealthy.

The biggest risk? Market swings. If you take a loan backed by stocks or bonds and the market tanks, your lender can call in the loan or sell off your investments without warning. This is called a margin call, and it’s no joke. A recent FINRA survey found that 20% of margin account holders faced a margin call at least once in 2023.

“Using securities as collateral can unlock liquidity, but it’s risky if you’re not prepared for sudden drops in asset value,” says Charles Schwab’s Megan Smith, Head of Advice Solutions.

And then there’s the risk of over-borrowing. It’s tempting to go big since banks give generous limits, but if you can’t pay the interest—or if rates spike—you could lose more than you bargained for, including the asset itself.

Here’s where a little caution pays off. Check out these key tips to make smart moves when borrowing against assets:

• Stick to loan amounts that you can pay back even if your asset value dips 30% or more.
• Keep an eye on market news. Dropping values can trigger stressful loan calls.
• Compare personal loan rates and secured loan rates to be sure you’re really getting a deal. Asset-backed loans usually have lower rates, but not always.
• Understand every detail in the loan contract—ask about margin calls, rate changes, and what counts as a payback event.
• If you’re using rental property, make sure the rent covers your loan payments no matter what.
• Don’t forget taxes. Deferred gains from not selling assets can catch up with you later.

Here’s a quick comparison of potential outcomes to watch:

Banks love secure loans—so it’s easy to think borrowing against assets is a win-win. Just make sure you know the downside before putting anything big at risk. Play it smart and keep a buffer so you don’t get squeezed when the market takes a wild turn.