If you are thinking about selling your Mutual Funds or shares to get money to cover a financial emergency, you need not do so. Instead, you can check a Loan Against Securities. Let us understand more about it, consider when to apply for it, and explore the steps.
About Loan Against Securities
A Loan Against Securities refers to a form of borrowing. Here, you can pledge your securities, like Mutual Funds and shares, to get a line of credit. Hence, a Loan Against Securities offers people who have invested in financial assets access to a line of credit and enables them to borrow funds for their short-term requirements within the approved limits.
Some of the categories of securities that your lender may allow you to use as collateral to get a Loan Against Securities usually include:
- Shares
- Mutual Funds
- Bonds
- Exchange-Traded Funds
When do you apply for a Loan Against Securities?
People typically invest to generate additional income and create wealth to meet their personal or financial goals over a particular period. However, there may be times when you face a financial emergency but lack liquidity. There may also be an intermittent need for money for business or personal reasons.
During such scenarios, you may want to sell your securities. Instead, you can use a Loan Against Securities to monetise your investments. Hence, it lets you leverage your existing investments to get the money without liquidating them.
Steps to apply for a Loan Against Securities
Nowadays, you can easily apply for an Instant Loan Against Securities online. To apply for it, follow these basic steps:
- Go to the website of your chosen lenders and select the option of a Loan Against Securities.
- In the next step, you should provide your basic details, such as your email ID, name, PAN, mobile number, the name and nature of the assets you want to pledge, and any other required details.
- Depending on your eligibility for the Loan, you may receive a reference number. Your lender’s representative should also contact you to proceed with the application.
- After the document evaluation, verification checks, and agreement execution are successful, you might be given a limit. This limit is against which you can draw down the sum you require, depending on your current needs.
- For the drawdown, you can contact your lender’s dedicated relationship manager or its toll-free number.
- Once the due process is complete, the Loan amount will be credited to your account.
- You only need to pay interest on the drawdown amount for the days used.
Conclusion
A Loan Against Securities lets you take advantage of your investments by allowing you to pledge shares, ETFs, and more as collateral to your chosen lender to get a line of credit. In addition, as evident, you can apply for it online without hassle by following some basic steps.
