Opting to borrow or take a loan against securities online, such as mutual funds, shares, and stocks, can be an effective way to get the money you need without selling off your investments. The security of these loans makes them an attractive option for anyone looking for additional funds without taking on too much risk or a long-term financial commitment.
What is a secured loan against securities?
In times of medical emergencies, financial difficulties, or wanting to invest in an asset, we need some assistance often from banks and financial institutions.
Loans are of various types – secured and unsecured loans where the secured loan means one chooses to mortgage an asset, stocks and shares, bonds, mutual funds, insurance policies, etc. The amount of a loan against shares or a loan against mutual funds you get depends on the value of the securities you have pledged with your bank or financial institution.
Key features of loans against securities?
- Quick processing
- Credit score does not play a significant role in the eligibility criteria
- Minimal documentation as the loan is dependent on the securities value
- Higher loan value can be availed
- Lower interest rates since it’s low-risk credit
- Flexible repayment options as it is given as an overdraft facility
Seven reasons why you should go for a loan against securities?
1. There is no need to liquidate your investments
With a loan against securities, you can borrow against the value of your investments without having to sell them. This means you can continue to earn returns on your investments while still having access to cash.
2. They can be used to leverage multiple investments
People have the option to utilize a small amount of money to control a larger amount of securities with higher returns on investments.
3. You have the advantage of lower interest rates
Loans against securities offer a lower interest rate as the lender has added security of the collateral or the mutual fund, which reduces the risk of default.
4. It acts as a flexible way of borrowing
Many lenders offer flexible repayment options, such as interest-only payments, which can make it easier for individuals to manage their debt.
5. It gives you access to immediate cash
Unlike traditional loans, a loan against securities can be approved and disbursed quickly, as the process is based on the value of your securities rather than your credit score.
7. You can choose between multiple securities
Most lenders accept a variety of securities, including loans against stocks, bonds, mutual funds, and even insurance policies, giving you the flexibility to borrow against the securities you have available.
A loan against securities is a great option for those looking for quick access to cash, low-interest rates, and the ability to keep their investments. It also comes with flexible repayment options and tax benefits.
Another factor that makes a loan against stocks or securities a prudent choice is that it offers the convenience of digital application. It’s always a good idea to consult with a financial advisor from Abhi Loans before taking out a loan and to be sure you fully understand the terms and conditions of the loan, including repayment terms and interest rates.
It is important to note that loans against securities are not suitable for everyone and come with risks. As the securities are being used as collateral, if the value of the securities falls, the borrower may be required to provide additional collateral or sell the securities to repay the loan. It is also imperative to understand the terms and conditions of the loan and the lender’s margin requirements.
Abhi Loans is an NBFC that helps you with options of loan against securities with proper guidance and recommendations, providing the best value for your assets.
Consult with an Abhi Loans expert before deciding on your loan requirements.