What are the Benefits of Taking a Loan Against Shares

During a state of financial crisis, people rely on their valuable assets like jewellery or property. Not only as a means of selling them but as a more viable option of taking a loan against them. Similarly, if you’re an investor, your portfolio of shares, bonds and mutual funds serve as a worthwhile resource.

You could use them to fund your financial emergency without liquidating them. With a Loan Against Shares (LAS), you could pledge your shares in exchange for money. Non-Banking Financial Companies (NBFCs) offer high-value loan against shares at reasonable interest rates. They also provide pre-approved offers on other financial products like personal loans, business loans, home loans etc. If you’re looking for an instant loan, a loan against securities could be a good option. Here are a few other reasons why you could consider it.

A Wide Range of Approved Securities

Whether you’ve invested in shares, mutual funds, FMPs (Fixed Maturity Plans), ESOPs (Employee Stock Ownership Plan), IPOs (Initial Public Offering) or bonds, most of your securities are accepted as collateral as per loan against shares eligibility. You get a certain percentage of these securities as your loan amount. Even after you’ve taken a loan against them, you do not need to transfer the full ownership of the shares. You can continue availing all the benefits you would have as a shareholder.

Enjoy the Benefits of a Secured Loan

In most cases, loan against shares is a secured loan where you offer your securities as collateral. Since you’ve offered security to the lender, the risk reduces, and the lender is capable of offering you a better loan against shares interest rate.
These interest rates are usually much lesser than that of a personal loan or business loan. Since the interest rate on any loan is one of the major expenses you’ll incur, it seems wiser to opt for a loan, such as a loan against shares that offers you a reasonable rate.Nil part payment or foreclosure charges

Get Usage Flexibility

When you take a loan against shares, you get the freedom to use the loan amount as per your needs. There are no limitations on how you wish to use the money. Moreover, once a certain amount is approved as a loan, you can withdraw from it as and when needed, and you will be charged interest only on that amount.

A Perk of a Convenient Process

The loan application process is quite simple too. When you apply for a loan against shares, from an NBFC you get to access it online. There is minimal documentation needed and you’ll have a dedicated relationship manager to assist you with all your requests.

Nil part payment or foreclosure charges

If you want to repay your loan quicker and skip the additional interest rate, NBFCs have nil part-payment and foreclosure charges options as well. This way even if you have a loan tenor of five years, you could close the loan by repaying it early without additional charges.

The next time you’re stuck with a cash crunch, don’t resort to liquidating your securities. Instead, consider a loan against shares. When you take this loan, you not only get the money to sort out your financial emergency but also continue to be the owner of your securities and reap the benefits as usual.