A Guide On How To Finance Your New Art Purchases

Investing in artworks can be challenging but it is also very rewarding. When you invest in this business, you simply take calculated risks in order to make profit.

It follows that if you want to make money from your investments, you should understand the art world and learn how the market operates.

In addition, you should learn the vital trick of buying and selling at the right time. There is also the little matter of raising capital to finance your investments.

Authentic artworks cost good money so you need capital to operate effectively in this market.

However, you can start small and increase your capital base as you grow in the business. Below are some secrets of success for smart people who want to make good money in this exciting and rewarding market.

Understand the Market

In every business, knowledge is power and reliable information is vital to success. This is why you should make the effort and understand how the market operates before you even buy your first artwork.

Investing in this business is not all about buying the paintings of Masters like Pablo Picasso, Vincent van Gogh and Michelangelo.

You are an investor and not a connoisseur so you should take a holistic approach to investing in artworks. As a dealer, you should know all about Minimalists,

Abstract Expressionists and Renaissance Masters. Your knowledge of this business should extend to Chinese porcelain, African woodcarvings, works by masters of the Impressionist era and even struggling artists who may just create masterpieces in future.

Keep Accurate Records

Accurate record keeping is one the qualities of a great investor. Buy a large diary and record details of “market behavior”. Remember that this market is very much like the stock market.

Prices go up and down in this market and some works have cycles. This means that there are specific periods in the year when prices rise and fall. Use this killer information to buy low and sell high.

In addition, the market is driven by consumer sentiment sometimes. Prices can head north or south on a whim. Learn to recognize trends in the market and try to profit from these trends.


In every business, it pays to diversify because this move protects you and increases your chances of success. Think of your collection as a stock market portfolio.

A stock market portfolio contains penny stocks, blue chip stocks, mutual funds and other money market instruments. In your case, your portfolio or collection must include works by established artists, struggling artists and others in-between.

The point here is that you cannot afford to risk all your capital on just one or two artists. When you diversify, you enjoy a huge advantage because if some of your purchases do not bring you good money others will.

Think Long Term

If you are investing in this business, you should look at the big picture. It is not always possible to buy an artwork today and sell it in a week or two. Sometimes, you get more value for money if hold on to the goods for a while and sell when the price appreciates.

Just think; some works that go for millions of dollars today were selling for just $200-$500 some years back. Now, you may not hit such heights with your purchases but the point is simply this. Buy your artworks for both short-term and long-term profit.

How to Finance Your new Art Purchases

Art can be an incredibly personal type of possession. Most buyers would prefer to buy works from certain artists, or they would like artwork that is in a specific style.

Other individuals merely want pieces that resonate with them, or feature a subject that is of interest. No matter the style the buyer wants, he or she may not have enough money on hand for these beloved art pieces.

Therefore it is a good idea to consider options for financing. There are numerous ways in which to get acquire the funds needed for purchasing art. Enthusiasts find it important to invest in art, whether it is make their homes more customized or for some other reason.

Read on to learn about more ideas on how to finance the artwork of your dreams.

Secured Loan

You can raise capital by taking a loan to get started in this business. If you have stocks in some reputable companies, you can easily get a secured loan using your share certificates as collateral.

At this point, you are testing the waters so take a small loan at the start. After you repay this loan, you can apply for a bigger one. As your business grows, you may need more money to operate but this is not a problem.

Your bankers will keep financing you as long as business is booming and you are repaying the loans at the right time.

Secured financing is a way to have the money for purchasing art. It can be for nearly any amount, as long as the individual has collateral that is equal to the amount they wish to receive.

This type of loan often is based on a value of items that are used as security. It may be necessary to get an appraisal of said items.

Secured loans typically are an alternative to other types, when the person has rather poor credit. It gives a lender confidence with giving out a loan, in the instance that the borrower defaults on the loan.

The lender will be able to take possession of collateral that is in place as security. He or she can put up jewellery, current artwork, or property as a means of loan security.

Secured loans are for more than just those individuals who have poor credit. They can be used by borrowers who have a high amount of debt, as well as on risky purchases.

It is possible for borrowers to receive lower interest rates for their secured loans, since this is less risky and he or she is backing the loan with something of value.

Some other items that may be used as collateral include the following: coin collections, antique firearms collections, antique cars, and historical artefacts.

Unsecured Loan

An unsecured loan is the one you get without putting up any collateral. These loans are granted based on your relationship with your bank and your financial integrity. If you want an unsecured loan to invest in artworks, your best bet is an overdraft.

This is short-term loan and it is usually approved for current account holders based on turnover and financial integrity. If you maintain a salary account with a reputable commercial bank, you can get an overdraft easily.

This is because your salary is paid into the account at the end of every month and this qualifies you for the overdraft. You can take this loan, invest and repay the loan after you have sold the goods.

Art financing sometimes may be made available with unsecured loans. There are numerous factors that must be considered before someone is approved. It is easier when one has a good credit score. However, this is not the only consideration in making the decision to approve someone for the unsecured loan.

If the individual has any debt, including car payments or a mortgage among other things, there may be an issue with getting an unsecured loan. Lenders will look at the debt to income ratio for the person.

They want to be clear that borrowers are not going to be overextended, and that they will be able to make loan payments.

Loans Covered by Your Collection

Some financial institutions will lend you money at relatively low interest rates if you have a collection already. In this case, the amount you get will depend of the value of the goods you have.

Maybe you have the opportunity to buy a great work at a decent price but you do not have the cash. With this option, you can easily raise the cash and repay the loan in installments.

Cash from Friends

Another way to raise capital is to get cash from friends and family. If your friends and relations are convinced that there are great prospects in your investments, they will lend you money to make the business grow.

Repay the loan at the right time and you can always borrow some more later.

Credit Cards

Credit cards are an alternative for purchasing artwork. It all depends on the credit card limit amount. It is important to note that they can have higher interest rates, depending on the negotiation made with the credit card company.

Interest will be added on to what you spend with the card if you do not pay it off within a month.

Credit card financing can be an attractive option, but other choices should be considered for the fact that there are no high interest rates or high monthly payments due.

Credit card financing is ideal for people who are not interested in buying pieces that are more expensive. Anyone who simply is in search of stylish art pieces for their house or office will do well to get credit card financing.

Auction House and Dealer Financing

Auction houses and dealers can provide financing to their clients. This can be used to buy art. The amount that a dealer lends is determined on the individual’s credit rating, as well as the likelihood of the borrower being able to pay back the loan.

Ownership of this artwork technically falls under the dealer until the buyer pays off the entire loan.

Since auction houses and dealers know the values of the pieces already, financing typically is arranged faster.

Lease to Own

A great way to acquire art is by leasing it. Certain companies will give buyers the option to lease art for a period of between five to ten years. Once the lease term is done, the lessee is able to purchase the pieces he or she wants. This is perfect for individuals who change up their home’s interior style on a regular basis.

Also, it makes it possible to learn more about what artists have to offer before making an official purchase. This lets potential buyers become aware of recent trends when deciding to lease a new piece of artwork.

There are several options for financing artwork. A viable method depends on different factors. These include the person’s current debt amount, what he or she has for collateral, and his or her credit worthiness.

Borrowing is a great means of securing art pieces, including what the borrower really wants to accentuate the style of his or her home or office. Even when he or she does not have the required money to make the purchase, there are plenty of possibilities.

Loans involve having to pay interest, so leasing may seem like the better option for some people. If the borrower does not feel the need to own the pieces of art right away, leasing gives potential borrowers the chance to determine if they would like to keep these artwork pieces or select something else to lease.

The individual also may go through auction houses, dealers, or banks to get financing.

Final Word

Investing in art is the way to go. There is big money in this business and you can become one of the winners here. Start small, think big, expand carefully and you will succeed in this lucrative business.

Weigh the alternatives carefully before you make your decision so that you do not end up regretting your choice for how you want to secure the financing for the artwork of your dreams.

Most importantly, take great enjoyment in the artwork that you thought you would only own in your dreams.