When you face some unexpected financial emergencies, you may find it tough to arrange funds if you don’t have any backup or substantial savings. You may be confused about whether to avail a personal loan or liquidate your assets to get money.
While availing a personal loan is a common solution to get access to money, the interest rate could be more. It may lead you to higher EMIs per month. As a result, you may find it tough to manage your monthly expenses.
On the other hand, if you decide to liquidate your assets such as shares and mutual funds, you can get the money to cover your needs. But, you will lose the interest-based profits that were about to get after the end of the tenor. As a result, even this method is not worth considering.
Have you invested money in shares and other approved securities? Then there is one thing that you can do and enjoy multiple benefits as well. Yes, the facility of loan against shares is what we are talking about.
What is the loan against shares?
The loan against shares comes handy to help you cover all unexpected financial needs super easy. Leading banks, non-banking finance companies (NBFCs) and others let you pledge your shares and get a high amount of loan.
The loan against shares works when your invested sum gets pledged. It is considered as collateral or security to borrow money as per your needs.
Since the facility is secured, the loan against shares interest rate is also lower. As a result, you get to repay the loan without hurting the monthly outlays.
The minimum worth of your shares/portfolio needs to be at least Rs.10 lakh for you to become eligible to apply for the loan against shares. The maximum loan amount that you can grab is Rs.10 crore.
Factors affecting the loan against shares facility
Although the loan against shares is an easy-to-apply facility, it is ruled by some terms and conditions or some factors affect it. Have a look:
- Your shares should come under the lender’s approved list
No matter how valued your shares are, it needs to be included in the list of lenders. Yes, if they are yet to come under the approved list of your proposed lender, you can’t apply for a loan.
- Not all can apply for a loan against shares
If you have some shares in the name of a company, joint business owners, HUF or NRIs, the loan application won’t be approved. Only the shares held by individuals of at least 21 years with a regular source of income are eligible to apply.
- The worth of your investment should be Rs.10 lakh
Most of the reputed lenders would want the value of your portfolio to be at least Rs.10 lakh for you to become eligible to apply for the loan.
The final terms and conditions governing the loan against shares facility should be of your lender which you need to check and then apply for a loan against shares.
Top NBFCs and financial institutions of the country like Bajaj Finserv presents some pre-approved offers on loan against mutual funds, business loans, loan against property and a lot more. They are designed to offer you a glitch-free and faster loan application/processing experience.
These facilities make sure that the customer gets the loan always on time without any glitches and troubles. So whenever you are looking to apply for a loan against shares always compare the different lenders which are offering this facility and make sure you match with all the eligibility criteria mentioned on the website.