Considering taking out a loan against your stocks rather than selling your investments is a smart idea. This option allows you to access funds while preserving your carefully planned portfolio. You can satisfy your immediate financial needs and preserve the possibility of long-term returns and dividends by choosing a loan against securities (LAS). Before considering selling your investments, it’s essential to understand loans against securities and learn how to qualify for one. This article provides more details about loans against securities.
What is a Loan Against Securities?
A Loan Against Securities (LAS) is a secured loan that you can obtain by pledging your shares, mutual funds, or other securities as collateral. It is an ideal solution for meeting short- to medium-term financial needs.
One of the key advantages of a digital loan secured by securities is that borrowers can obtain cash without liquidating their investments. This means you can use your stocks as collateral for a loan while continuing to receive returns on them.
Steps to Get a Loan Against Securities
The simple steps involved in getting a loan against securities are as follows.
Step 1: Select the shares to pledge after logging into NetBanking.
Step 2: Accept authorisation by using an OTP (one-time password).
Step 3: By verifying the OTP, you can pledge shares online with Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL).
Step 4: Establish an automatic monthly interest deduction and add a bank account to collect funds.
Step 5: Approve the loan contract by signing it.
Step 6: Within two hours, the money will be credited to your account.
Tips to Get a Loan Against Securities Easily
Take a look at the advice before applying for a loan against securities.
- Specify the Goal of the Loan: You should explain your need for a loan in detail. This allows the lender to quickly determine your goal.
- Keep Your Credit Score High: To qualify for any kind of loan, even a loan secured by shares or mutual funds, one must have a high credit score. Lenders evaluate your risk as a borrower based on your credit score. If you have a good credit score then you are more likely to make your loan repayments on time.
- Selecting a Reputable Lender: LAS is provided by numerous lenders. Selecting a high-value lender that provides the most value in terms of both pricing and security is crucial.
- Maintain a Stable Income: Lenders look for proof that you produce enough money each month to cover your loan payments. If you work for yourself, you might have to provide more paperwork to support your income.
- Audit the Pledged Securities and Shares: You want to examine the securities and shares that have been offered as security. Check to see if your assets fit the requirements on the list of allowed holdings kept by banks.
Benefits of Availing Loan Against Securities
The various advantages of a loan against securities are as follows.
1. Uninterrupted Investment Growth
You can access funds without having to sell your investments if you want to take out a loan on securities. Utilising market opportunities guarantees the growth of your investment portfolio.
2. Cost-effective Financing
Interest rates on loans secured by securities are usually cheaper than those on unsecured loans. It is an affordable choice for anyone looking to pay rates as low as possible.
3. Streamlined Approach
You can enjoy a hassle-free journey with a streamlined approach after you understand how to pledge shares or other securities. The prompt and easy financial solution offered by this financing option is made possible by its quick approval and quick fund disbursement.
Conclusion
Putting equities, mutual funds, and shares up for collateral greatly improves your chances of getting approved. Applicants interested in obtaining funding without having to sell their investments might consider a loan secured by securities. One of the best loan app for safe and secure loans is Tata Capital. You can follow the above-mentioned steps to easily avail the loan.
