How to Write a Proof of Collateral Letter

Proof of collateral letters are important when applying for a secured loan from a bank, credit union or other lending institution. The bank is guaranteeing the loan based on clear evidence of collateral, with approval of the credit application unlikely if your letter is not convincing. Simply indicating in the letter that the collateral exists is not enough. Supporting documents are usually necessary for a successful proof of collateral letter. The supporting documents are usually available through an independent third party confirming the presence of collateral. Lenders retain the rights to collateral until receiving final payment on secured loans.

Instructions

1

Gather supporting documents confirming the collateral. Examples include bank statements, property titles, audited financial statements signed by a certified professional accountant, and authenticity statements signed by appraisers for jewelry or artwork.

2

Address the letter to the specific person requesting the proof of collateral letter. The proof of collateral letter really serves as just a cover letter for the supporting documents. Get to the point in the first paragraph by writing that the letter and the supporting documents are proof of your collateral and that you welcome independent inspection of the collateral or documents by the recipient.

3

Explain the documentation in the second paragraph. Tell the recipient what the documentation is, and further steps the recipient can take for additional confirmation, such as speaking directly with other bankers where you have money on deposit.

4

End the letter with a valediction or complimentary closing such as "Yours truly."