If you wish to take a loan against shares, know all the aspects that you should consider before opting. Read ahead and grab the knowledge.
A loan against share are those financial loans which are provided against listed securities such as bonds, shares, and insurance policies. Investors can take the loan against an existing investment they have made, to meet the fund requirements.
Mostly, people invest in shares because it is one of the popular methods to invest for long as well as short terms. Every lender has a list of securities from which they choose which to take as a security against the loan they are offering. The list of securities differs from lender to lender. The securities are taken to ensure that the lender will not incur the loss in case of any default.
The loan against securities is beneficial in times when you need cash urgently for any business or personal requirements. But, before anything, you must know the features and benefits that you can avail if you opt for this loan.
Feature and benefits of loan against shares
Here are few features and benefits that you can enjoy by opting this loan.
To meet your various financial requirements, most of the known lenders offer a loan amount up to Rs.10 crore. The minimum loan amount that you can get is Rs.15 lakh. The final sanction of the loan amount will depend on the portfolio value and few other criteria. You can use this loan amount to fulfill your personal or business needs.
Usually, all leading lenders offer you a dedicated Relationship Manager to assist you with all your requests. You can avail this service and get the assistance of the manager 24/7.
To ensure speedy processing of your loan against shares, lenders provide you with online approval facility. The online processing will just take 5 minutes to get the approval of your loan.
For your convenience and ease in repaying your loan amount, the foreclosure and part-payment charges are not collected by the lenders. You don't have to pay any foreclosure or part-payment charges if you wish to do the same.
To track your loan details with ease and provide you convenience, lenders offer you the option of online access to your loan account. Now, you can get details of your loan account form anywhere throughout the world.
In order to add more value to your loan and get more benefits out of it, you get few exclusive pre-approved offers form the loan lender. To get the loan against shares, you need to qualify the eligibility criteria. So, know the eligibility criteria first.
For taking a loan, you must be a resident of India.
You should be of a minimum age of 25 years at the time of the loan sanction.
You should be a salaried or self-employed individual.
You must be having a regular source of income either from your salary or your business income.
For taking a loan against securities, the value of securities should be Rs.25 lakh.
Now, as you know that the loan against share eligibility criteria are easy to meet and are not cumbersome, you should take note of the necessary documents required to take the loan.
You will need to submit your KYC documents
Your income details with your latest payslip
Your demat account statement for the past 6 months
Your bank account statement for the previous 3 months
Mode of repayment of the loan amount
One can repay the loan any time during the tenor of the loan. You can repay the interest due and principal loan amount through various modes of payments like RTGS / NEFT or Cheque.
Usage of loan against shares
To fulfill all your personal and investment needs, and to meet any uncertainties, this loan amount can be used. It is an ideal way to get the funds without liquidating your securities. You can avail this facility when you are expecting a fund requirement after a few months, and you need some financial help in the meanwhile.
The interest you need to pay
The interest for such loan is usually calculated on a daily basis. You will pay the interest amount on a monthly basis calculated on the daily outstanding balance of the loan. Most of the leading lenders charge around 9% to 12 %, which may vary from one lender to another.
How to apply for a loan against shares?
To apply for this loan, you need to follow these steps:
Step 1: Fill the online application form available at the lender's website.
Step 2: Receive a confirmation e-mail and SMS to know the status of your loan application.
Step 3: Submit the asked documents to the lender's representative, who will initiate and take the loan process further.
Step 4: You will get the loan amount in your loan account after the verification of the submitted documents. You will also get the login details of your loan account to access it digitally.
But, before applying for a loan against mutual funds, you should check whether you are eligible for it or not.
The Bottom Line
Now, as you know most of the vital information regarding a loan against shares, you should take a wise decision for opting this loan as it will create a lien on your shares investment. So, go ahead and enjoy the loan benefits.
Loan Against shares is the best source for arrange the fund it will help you to get the loan at low rate of interest. This segment explained about the each and everything about the loan against shares and how to apply loan against share online.
The loan against shares facility offers you an opportunity to monetize the listed investments like mutual funds, equity shares, bonds, and debentures. You can liquidate these investments to raise capital for your personal or business funding needs.