As uncertain times mount, people scramble to raise funds for emergency needs. It is still possible to take a planned loan even if you do not have any emergencies. If you have investments, you can get a loan against them. Leveraging your assets in this way could be good for your financial health.
What is a Loan Against Securities?
A secured loan is issued by a bank or an NBFC (non-banking financial company) using collateral such as securities or deposits. As a reminder, banks accept only pre-defined securities as collateral.
You make investments for various reasons, such as to purchase your dream home, save for retirement, or even meet your business requirements, no matter how small or large they are. Investing could have any goal, but liquidating all your securities should be the last resort.
During the application process for a loan against securities, keep the following things in mind:
Loan Amount & Purpose of Your Loan
An occurrence may be treated as an emergency due to its timeliness. Therefore, defining the purpose of your loan is essential. You can use this information to determine whether you need a loan and how much you need. Also, remember that you won’t receive the entire value of your securities as a loan. The amounts sanctioned range from 60 to 80 percent of the total value. An NBFC or bank will approve 12 to 16 lakhs in credit/business loans for your business purposes if your securities are worth 20 lakhs.
Find the best lender for your needs.
Securities-backed loans are now available from several banks and non-bank financial institutions (NBFIs). With so many tempting loan offers, it takes time to decide which one to take. For your benefit, select a lender who offers a shorter repayment period and the desired amount for your security. Rurash Financials can quickly assist you in getting a loan against securities with the industry’s lowest Interest Rates of 8.5% and offers even Discounts on the processing fee.
Know the List of Collaterals
Upon deciding to borrow money from a bank, visit their website and familiarise yourself with their collateral policy. According to the above statement, banks provide loans based on specific securities. It is essential that you become familiar with the list in advance.
You can obtain a loan against these collaterals
- Deposits in banks
- Bonds issued by NABARD
- Bonds issued by UTI
- Policyholders’ insurance
- Mutual Fund Units
- Non-convertible Debentures
- Demat Shares
Check Your Eligibility for Loan against Securities
You must meet specific criteria to qualify for the loan. The following are some specific eligibility criteria for loan against securities:
- For you to qualify, you must be a resident of India
- A person must be between the ages of 21 and 65 to qualify
- If you are self-employed, you must demonstrate a regular income source or be a salaried employee in a private or public enterprise.
- If you want to get a loan from a bank, you must meet their specific requirements and have the required securities.
Advantages of Availing a Loan Against Securities
High Loan Amount
A bank or NBFC can loan you up to Rs 10 crore based on the market value of your securities, which is much higher than credit cards or personal loans.
No Pre-payment Charges
When you take out a personal loan, you must pay a percentage of your loan as a prepayment fee. No additional fees will be charged if you repay the entire loan amount at any time.
Lower Interest Rate
Securities loans have interest rates between 8.5% and 15%. On the other hand, it is much higher in the case of personal loans or credit cards.
It’s as easy as it gets when it comes to payback. When you finish the loan term, you can pay off the actual loan amount whenever you like by paying only the interest in EMIs (equivalent monthly installments).
Earn from Securities
The benefits of your investments will still be available to you even if you have kept your securities as collateral. As a result, the interest earned on all the securities will be credited to you, so even though it is collateral, you can still benefit from it.
You could borrow against your securities if you have an unexpected financial need. It is not a good idea to dilute your assets. If you invest wisely, your investments will provide a secure future. Let them grow, and they will come to your aid anytime.
You can borrow against securities if you need cash urgently without liquidating your investments. Regardless of the borrower’s pledge, profits and dividends are earned on the investments. Due to the fact that these loans do not have EMIs or repayment terms, it is not recommended to sell assets quickly or at a loss. Instead, raise funds through loan against securities instead.
Rurash Financials offers customized loan solutions based on your investment portfolio and needs. By taking out a loan and pledging your securities with Rurash, you will be able to take advantage of the most competitive interest rates Rurash Financials is one of India’s investment management firms, providing financial solutions to augment the client’s wealth and facilitate building a legacy. For any guidance regarding financial instruments, Connect with the relationship manager now or write to: [email protected]