Collar Advances can offer meaningful savings compared to other financing options:
vs. Margin Loans: Traditional margin rates are typically 2-6% above SOFR (currently around 4.4% as of early 2025), putting effective rates at 6-10%+. Collar Advances at 3.7-4.2% represent a lower cost of capital, with the added benefit of built-in downside protection and no margin calls.
vs. Securities-Backed Lines of Credit (SBLOCs): SBLOCs typically charge SOFR plus 1-4%, with variable rates that can increase over time. Collar Advances lock in your rate for the full term.
vs. Mortgages: If you're considering using a Collar Advance for real estate, rates around 3.7-4.2% compare favorably to mortgage rates (approximately 5.75%+ as of early 2025), and a Collar Advance enables you to make a cash offer, often more competitive in real estate negotiations. You can then potentially refinance to a traditional mortgage when rates become more favorable.
All rate comparisons reflect market conditions at the time of writing and are subject to change.