How to get a loan against your equity shares.docx

1. How to get a loan against your equity shares Loan against securities is the fastest way to get money. Plus, it is available at low-interest rates. Loans against securities (LAS), technically defining the loan against the equity shares, are offered by lenders at rates that are marginally higher than the home loan rates. The financial requirements can sometimes be a distressing or emergency condition. And in such dire scenarios, instead of selling investments, a borrower can take the loan against securities on any equity shares they hold in their Demat accounts. Despite that the investments are provided as collateral with a lender; they will continue to grow. The added advantage of choosing the loan against shares is the scope of receiving the dividends, bonus, etc. even when the loan is being serviced, and the equity shares are pledged as collateral for the loan against shares. Options to work on a loan against securities are many. And one can use securities, such as stocks, mutual funds (either equity or debt), insurance policies, and bonds, to get money. Most lenders have a list of the kinds of securities they are willing to take on their websites. A bank may only accept stocks from the top 50 or 100 companies for their equity shares as collateral, depending on the performance of the market value for the equity shares. Most NBFCs like Abhi Loans offer digital and online solutions, wherein the estimations of the collaterals and the processing of loans against securities take place in a quick turnaround time. When it comes to equity shares as collateral for a loan against shares, a lender will loan 50–60% of the value of the securities. It could be higher for debt funds or bonds.

2. The implied risk in pledging the equity shares as collateral for a loan against securities is the instance wherein if the value of the securities goes down during the loan period, the lender can ask for more security. What also matters to borrowers is a quick disbursal of loans, this is where NBFCs like Abhi Loans are a step above traditional financial institutions. Compared to a legacy bank, NBFCs are quicker in their due diligence and disbursal. One should pay attention to details on the fees on loans against shares. A lender can charge certain compliance and convenience fees on the loan agreement, including a fee for creating a pledge and so on. Borrowers also have more freedom when it comes to paying back their loans since there is no set schedule. You can pay back the loan on your schedule or set up recurring payments. There is no stipulated or scheduled payment structure or fees for paying off the loan early. One must be aware of the monthly interest being added to the loan amounts as per the loan processing contract terms for any kind of loan against securities. With a portfolio line of credit, one can use the money from investments without having to pay the usual capital gains tax. That is because of borrowing against the investments as a loan against shares instead of selling them. In today’s world, the approach to the loan against shares has become much easier. Reach out to your banking branch, or good NBFC service providers like Abhi Loans to apply for loans against shares.

3. With the current digital tracking of equity shares in the Demat form and other digital banking facilities, the lending partners shall assess the portfolio and communicate with the customers with adequate information on the disbursal value of the loan against shares pledged, the interest charges, tenure, and processing fee details. Upon the acceptance of the agreement from the customers, the loan application against shares is processed to the customer's bank accounts in just a few hours, which makes it extremely useful for consumers.