Life may throw many situations that may demand an urgent flow of money. When you don’t have any financial backup, you are left with no options than to avail a loan.
However, the loan amount that you may get may not be enough to cover your needs and expenses. Hence, if you have made some investments in shares, stocks, mutual funds, FMPs, bonds and more, you can avail a loan against them.
As a result, you may get a higher loan value to fulfil your diverse needs.
What is the loan against shares?
The loan against shares is a unique facility that lets you borrow some money. It is when you keep the shares as security or collateral to your banks or lenders. These shares are not sold to the lender and are only kept as collateral.
The borrower continues to receive shareholders benefits such as bonuses, rights and dividends. The loan facility also lets you receive an overdraft against the shares that you pledge. The final loan amount and overdraft amount depend on shares’ value.
Not all shares can be pledged and kept as collateral. Lenders have a specific list of shares that can offer financial assistance against. These shares could be liquid in nature and maybe from leading companies and high valued securities.
How does the loan against shares work?
When you generally apply for the loan against shares, most of the conventional lenders open a current account in your name. You are given an ATM Card, chequebook, mobile and internet banking facilities. As a result, you get the freedom to withdraw cash as and when required.
However, when you apply for a loan against shares with a leading online lender, you go through an easy online process. A dedicated Relationship Manager is appointed just for you to guide you with all queries. You are also allowed to access your loan account via the lender’s digital customer portal. You can track the loan progress, make repayment and so much more.
Eligibility and documents
The loan against shares is a facility that can be availed only adult individuals and not by joint business owners, companies, minors, HUF and NRIs. To become eligible, you need to prove your eligibility and furnish some basic documents such as:
You need to be an Indian citizen
You must have attained an age of 21 years
You should be a working or self-employed professional with a consistent flow of income
The minimum shares’ portfolio needs to be at least Rs.10 lakh
The maximum loan that you can get is up to Rs.10 crore
ID and address proofs
Income proof such as Salary Slips
Last 6 months’ bank statements
The documents related to your subscription of shares
What’s the purpose of the loan against shares?
All borrowers are free to apply for a loan against shares facility for anything. You can use the borrowed money for the household expenses such as medical emergencies to marriage to higher study and so on. You can also use the money for business expansion and operational needs and other purposes.
The loan against shares comes with zero part prepayment and foreclosure facility. You can easily make prepayments and foreclose the loan account anytime without paying anything extra. The LAS also comes with the overdraft facility and shares are reviewed per week to reassess their value.
Thus, if you are looking to fund many personal and professional needs, you can apply for a loan against shares. You can do that with a leading online lender and get quick approval.