How Does Debt Consolidation LoanWork?

Types of Debt Consolidation Loan

Financial emergencies could compel selling off your investments in haste. Getting a loan against stocks offers a viable alternative to get the cash you need without liquidating long term investments.
Select to pledge your stocks for a loan instead, because:

Ownership

By availing a loan against securities you do not consign the ownership of your investments to the bank. You still hold the ownership and you continue to accumulate the returns on your investment. Sanctioned loan amount typically is between 50℅-90℅ of the value of the stocks used as collateral.

Interest

Leading banks offer low-interest rate on loan against stock as compared to unsecured loans since the loan against stocks is secured with collateral. Leading banks charge 12-15%. Interest, on the daily outstanding balance.

Flexibility 

The flexibility offered by the loan against stocks makes them comparable to personal loans i.e. one can use the loan amount for the purpose of their choice. With no prepayment penalty, short loan tenures that are extendable, the flexibility offered is massive.

Application process

The loan application process is simple, online, and requires very little paperwork and legwork. The paperwork demands the submission of the photograph, identity proof, address proof, signature proof, DOB proof, income proof, bank account statements. The process is as simple as opening a bank account and does not need a guarantor.

Instant liquidity

Instant disbursal of the loan amount is another great advantage of getting a loan against stocks.

To know more about the benefits of loan against stocks, click here: 5 Reasons to go for the Loan Against Stocks

Just like any other loan, even life insurance policy loans have their own pros and cons. It is essential to look at both aspects before making the decision to borrow this loan.

Pros

When getting a loan against a life insurance policy, the process is quite simple. This is because you are borrowing this loan against your personal assets and no approval process needs to be followed for income verification or credit checking. Moreover, policy loans have lower interest rates compared to other bank loans that come with higher interest rates.

In many cases, life insurance loans are even tax-free and can be availed within five to 10 working days. You can even choose the funds for a loan against life insurance policy the way you want. Just because your policy’s cash value serves as collateral for the loan, you can use the money for any purpose – from household billing to vacation funding.

The insurance company won’t require any explanation for how you wish to spend your funds after getting the loan. Unlike the credit card or bank loan, there is also no need to pay a monthly amount for your insurance policy loan and there is no payback date either.

Cons 

If the loan borrower dies before paying the loan, the loan amount and the interest have to be paid by the beneficiaries. This could cause a problem to the beneficiaries if they were intending benefit from that insurance policy.

If this loan amount is unpaid, the interest adds to the principal amount of the loan. If the balance of the loan increases more than the cash value amount, this policy could even lapse and cause risk of termination from your insurance company.

To know more about the loan against life insurance policy and its and pros and cons, click here: Loan Against Life Insurance Policy – Here are Some Pros and Cons!

Running a successful business means an everyday struggle to ensure that it keeps running smoothly.

When you have a business, there is a continuous struggle to make it run smoothly. The biggest part of this situation is generating regular funds that can be used as working capital. Apart from being able to do an adequate amount of business, there are other ways to generate funds as well.

One of the best ways of doing so is by using asset-based loans using which business of all sizes can raise the required capital to ensure that their business keeps running smoothly and helps it tackle emergencies better.

Collaterals Which Can be Used

There are many collaterals which can be used when it comes to asset-based loans, a few of which are as follows -

Invoices

This is something which many entrepreneurs do not know about but the due invoices can also be used as collateral to secure the loan. These are the bills which are generated when your company has already provided the required service to another company or customer and awaiting payment.

Machinery

If you are into manufacturing or any other business which involves making use of machinery, then the same can be used collateral to obtain the loan without any hassle. You also become eligible for a higher loan amount.

Benefits of an Asset-Based Loan 

Stability

Not just any stability, but financial stability which is something that most entrepreneurs seek when running a business as such a loan ensures that your operations are running smoothly and without any operations.

No Restrictions

Asset-based loans do not come with any end-usage restrictions. Thus, you can use it for any kind of business-related need be it stocking inventory, hiring more experienced staff, or renovating or upgrading existing infrastructure etc.

To know more about the asset-based loans, click here: Can a Business Use Asset-Based Loans?

Loan against bonds is an easy way to get finance by serving your security as collateral. It is popular due to its low-interest rate, as you hand over your security documents to the financial institution. Applying for a loan against bonds is very simple. Here is a step by step instruction list.

1. Choose the right lender

Research online and select a lender which provides the maximum offers and offers online application.

2. Check your eligibility

You must be a salaried/ self-employed Indian citizen who is above 21 years. Moreover, the minimum value of your security must be Rs.10 Lakh. This eligibility differs from one lender to another.

3. Calculate the interest

Use the lender’s online calculator to check the interest, tenure, and EMI of the loan against bonds.

4. Apply online

Collect all the documents such as ID proof, address proof, passport size photograph, document proof of securities. Submit after attaching them to the application. You can apply offline, but you will save a lot of time if you apply online.

The lender will process your application, and if sanctioned; will transfer the fund to your bank account. The entire process to apply for a loan against bonds will hardly take a few days.

To Know more about the financing through a loan against bonds, click here: Loan Against Bonds – An Easy Way to Acquire Finance

There are certain points to consider before you opt for a loan against an insurance policy. These points will help you understand the terms and conditions of the loan application.

These points are as follows:

Eligible policies

Not every insurance policy is qualified to serve as collateral for a loan against policy. Therefore, you have to cross-check if his/her policy is eligible by going through the eligibility criteria.

The surrender value 

The current value of your policy decides the loan amount or the amount of limitation. For example, if you have an insurance policy of Rs,10 Lakh; you will be unable to receive Rs.10 Lakh during loan processing. The loan amount is not based on the policy’s maturity value.

Average waiting period

Normally, there is a waiting period of about three years before you can apply for a loan against policy.

Dealing with defaults

Your policy will lapse in case of any default with the payment system. In such a case, the due amount will be adjusted from the surrender value. This will also be unable to safeguard you and your family and undermine the purpose of investing in an insurance policy.

Repayment system

You have an entire insurance policy term to repay the loan. You can either pay back the principal amount earlier or continue paying the interest every month. The rest of the loan amount will be settled against its claim once the insurance policy reaches its maturity.

Make sure that you keep these points in mind before you go for a loan against policy.

To know more about the loan against policy, click here: 5 Things To Remember While Taking A Loan Against An Insurance Policy

One indirect benefit of an increase in Investment opportunities is that the investors can today also avail a loan against the mutual funds, bonds and shares they own and invest in. The amount that you get a loan is lower than the actual market value of the investment/units that are held by the loanee (known as margin or haircut).

Anyone would like to avail a loan at low-interest rates and the loans against mutual funds are benefiting in this regard. But while the loan against mutual funds units and holdings has a low-interest rate you, need to handover the assets (known as collateral). Here are some points that you must consider and evaluate before actually taking a loan against mutual funds, as these aspects have an impact on the interest rates of the loan.

Cross Check The Eligibility

Not all Mutual Funds are eligible for loans. Therefore you need to check the eligibility conditions laid by the particular financial institution from which you are trying to get a loan against mutual funds. The better mutual funds are highly valued and you get loans at lower interest rates for them.  Interest rates are the highest for risky funds.

Value Of Your Mutual Fund

Interest rates for home loans are subject to the market value of the mutual fund. You can get a loan easily when your mutual fund units have a good value, as these loans are deemed to be of less risky nature by the financial institutions.

Prepayment

Prepaying the loan against mutual funds is always a better option when you are seeking affordability and saving of costs. Whenever possible, repay the loan early so as to save cost and the interest rates that you would otherwise pay each month.

Credit History

The repayment and credit history (CIBIL score) also have an impact on the ease with which you get the loan. The better your credit history, the more likely you are to get the loan easily. A Credit score of 750 or above is good.

Comparison

You should check and compare the interest rates a few financial institutions and from which you decide to get a loan against Mutual Fund. The comparison can bring to you options towards getting your loan at a lower interest rate.

You can choose from a wide range of loan options today including the business and personal loans, and also get a loan against your shareholding. The processes are now more hassle-free and consume least of time.

To know more about the loan against mutual funds facility, click here: Borrowing a Loan Against Mutual Funds at a Lower Rate Made Easy

Buying a home is a big financial decision. Thus, proceed with it only if you have these three things figured out:-

1. Your income is sufficient to pay the EMIs and then manage your monthly needs alongside having just enough to save for definite future expenses. 
2. Secondly, you have enough savings to pay for the down payment. 

While the first thing - understanding whether you have enough to manage your present and future expenses alongside paying the EMIs won’t be difficult, having enough savings to pay the downpayment might be tricky for you.

Even though you might have investment securities on your name which could be liquified to arrange the required sum, taking a loan against them might be a better option. Doing so would not only preserve the maturity value, it ensures your other financial goals don’t have to be postponed.

What is a loan against securities? 

A loan against securities in India works on the similar concept as that of a loan against property. You can mortgage your investment securities such as mutual funds bonds, stock bonds, company FD certificates etc. to avail a loan against them. That said, the loan amount would vary based on the market value of the product.   

Advantages of taking a loan against securities in India for paying the downpayment of your home

• A higher loan amount is available (mortgage an asset with higher maturity value and you’ll get a higher amount as a loan).
• A longer repayment tenor.
• Lower interest rates for the loan.  

Bottom line: Even the eligibility criteria is pretty easy to qualify.

To know more about the loan against securities, read this full article here: Use The Loan Against Securities Money to Fund Your Home

There arise many instances in our lives wherein we require funds on a short notice but we do not have the requisite amount in our savings. The emergency is of such a pressing nature that we cannot wait for a bonus or salary hike and the assets cannot be liquidated on such a short notice. Despite this many individuals go ahead and sell their assets at a loss and lose ownership as well.

What such people do not know is that instead of selling off their high-value investments such as mutual funds, they can apply for a loan against it. This not only helps in retaining ownership but they also continue to earn interest for the period during which they are pledged as a collateral.

Availing Loan Against Mutual Funds

There are a number of financial institutions including NBFCs (Non-Banking Financial Companies) which offer loan against mutual funds at nominal rates. One of the biggest benefits provided by NBFCs is that of the sanctioned amount, you have the liberty to use as much money as you require and pay interest only for the part that is used. This greatly reduces the installment which is paid each month.

Loan Against Mutual Funds

The process of application is very easy. Here’s how you can do it - 

1. Apply for the loan online
2. Fill out the application form with the basic details
3. A confirmatory text will be sent along with an email regarding the status
4. Next, a representative will visit you to complete the process and gather documents
5. Once your documents have been verified, the funds are disbursed in a very short span of time. 

You can also track the disbursal of the loan from the online account which is provided to you.

To know more about this loan facility, click here: How to Avail a Loan Against Mutual Funds

Did you know that your fixed asset such as property can be a lifesaver especially in times of financial need. It can be used to pay for expensive purchases, for medical treatment, higher education, wedding and much more.

Lenders let you avail loan against property for residential or commercial. Where, as a borrower you can obtain up to a maximum of 60% to 70% of the market value of the property as loan.



Here’s a low down of the various aspects of the loan against property -

The Application Process - It is very easy to obtain the loan online. You have to simply fill up an e-form and provide the necessary details to get started. The process does not take long, is hassle free and secure, as your personal information is never compromised. Moreover, if you prefer getting in touch with the lender’s representative you can do so too at your convenience and have the process done at any of your nearest branch.

The Paper Work - One of the most important aspect of the loan is the documentation which supports your loan application. Be it your KYC documents or the copy of the property to be mortgaged submitting the relevant documents, when needed, will increase the chances of your application getting accepted for the loan. If you fall short of any paperwork have them arranged in advance and keep original copies with you for record-keeping purposes.

Easy Repayment - Get the loan from reputed lenders such as NBFCs who offer facilities such as - the Flexi Hybrid and Balance Transfer to help you manage your finances well.

Additional Reads:

How to Qualify for Loan Against Property in 5 Steps?
Everything you Need to Know about Loan Against Property

Although, most people think that a traditional life insurance policy is the one which offers benefits in case of death of the policyholder. However, with time several products got added to the initial policy to help you save and invest better. One of which is the feature of getting a loan against your policy.

But before you think of getting loan against your life insurance policy it is important to know if this lending will make sense to you. You may get in touch with your policy provider to analyse the impact of loan on your policy with in-force illustration.

Loan against life insurance policy

Whether taking a loan against your life insurance a good decision, let’s find out - 

Easy to borrow - It may be noted that borrowing from your insurance company will be easier since you are already their member. Here, the cash value of the policy acts as collateral against the loan. In case of failure to pay it back the lender can take away the cash value of the policy or the death benefits of the policyholder to compensate their claims.

Requires planning - One must plan cautiously and closely monitor the cash value and loan so as not to default and to manage your finances effectively. You can make use of in-force illustration to know the impact.

Plan the loan - You can only get the loan against your policy when you have built a substantial cash value. The right time to avail the loan can be discussed with the representative of your insurance provider to help you make the right decisions.

For more information related to this, read this full blog: How to Easily Avail Loan Against Life Insurance Policy

Since the time I have been investing I wonder how actually can mutual funds be of use. Though, I would admit that these investments have been quite a nail-biting experience for me. But, nonetheless they have offered me appreciable returns.

Well, to my surprise my financial planner told me that now that I have made appreciable returns on my mutual funds I can take a loan against them. I am thrilled because I am planning an exotic vacation with family and now I feel I won’t have to withdraw from my savings.

So, I took out time form my schedule and sat down with my financial planner how to go about it. She suggested me an experienced lender with credibility and reputation. Then, depending on the amount I needed she helped me fill up the form for the loan against mutual funds online. After which, we won’t have to wait loan and can enjoy instant approval for the loan.




Trusting my financial planner I took the bargain and applied for a loan amount which would cover my entire vacation itinerary and which I can easily pay back on a monthly basis. I was thrilled to get the loan as planned and moreover I suggested my colleague for the same as he too needed funds to manage his mother’s treatment expenses.

The best part is I don’t have to take the help of my financial planner often. As my loan is all set up online I make sure the repayments are on time and that I track and manage it even when I am out of town for business work.

Also read: Did you Know you can Get a Loan Against Your Mutual Fund Units