Keep These Things in Mind When Taking Out a Loan Against Shares

1. Keep These Things in Mind When Taking Out a Loan Against Shares

2. The advantages of this financial tool are unrivaled. However, there are a few factors to keep in mind when applying for a loan against securities. Many banks and non-bank financial companies (NBFCs) offer loans secured by securities on specific stock market investments. These loans are simple to apply for and might provide you with a substantial sum of money. A loan against securities is applied for in the same way that any other loan is applied for. You must complete a form with your information and submit it together with the required papers. Following the completion of the verification process, the lender will deposit the loan amount into your bank account, which you can use as needed. With low-interest rates, EMIs, and a relatively large loan amount, the advantages of this banking instrument are unrivaled. However, there are a few factors to keep in mind when applying for a loan secured by securities. While the majority of banks promise to give large loan amounts, there is a catch. Banks do provide large loans, but the amount is determined by the value of the collateral. The majority of banks give loan amounts between 60 and 80 percent of the loan to value ratio. This implies you might not be able to acquire a loan that is equal to the value of your investment. For example, if you put up INR 10 lakh in mutual fund units as collateral, you might be able to receive a loan for INR 6 lakh to 8 lakh. Collaterals' list: Lenders will only lend money on certain investment products like insurance policies, non-convertible debt, NABARD bonds, UTI bonds, mutual fund units, Demat shares, and national savings certificates (KVPs) (in Demat form). Before applying for a loan, make sure you look over your lender's collateral list.

3. There are no EMIs or postdated checks: Some banks and NBFCs provide these loans as an overdraft or current accounts. The credit is backed by the collateral you hold with the lender, which is why the interest rate is cheaper. Furthermore, interest is only charged for the period it takes you to return the loan. You won't have to worry about prepayment penalties if you take out a loan against securities. You may return the loan whenever you choose because it is given on the same terms as an overdraft. Costs and fees: With so many perks available, there is one drawback you may encounter: charges. Processing fees, yearly maintenance fees, and even closing fees are all part of the loan process, but there are many more fees to consider when taking out a loan against assets. First and foremost, you will be charged a 0.15 percent to 1% processing fee. Following that, you may be required to pay a pledge and unpledge cost, as well as a renewal charge or yearly maintenance fee, which can range from INR 1000 to 10000. You may also be charged for ATM services, cash deposits or withdrawals, and NEFT or RTGS fees. Check the loan against shares eligibility at spark.loans today and avail of a loan against shares at irresistible rates.

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