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

Your insurance policy offers peace of mind to you and your loved ones in case of an accident, serious health issues or death, depending on the kind of insurance you have. However, did you know that you can avail loan against an insurance policy to meet your short-term financial needs?

Here are some details that you should know before you decide to take a loan against your insurance cover. 

You can Get Loan Only Against Specific Insurance Policies

Not all insurance policies can be used as a loan against the insurance policy. Some lenders will provide loans against endowment, whole life, and money back policies while others will accept ULIPs and term policies. Usually, lenders lend up to INR10 crore against high-value insurance policies that can be repaid in 12 months.

Waiting Period After Buying the Policy

It is not possible to buy an insurance policy and immediately use it as collateral for a loan. If you do it, your application will be rejected. You need to wait a minimum of three years after buying your insurance policy to apply for a loan. So, make sure you first talk to your insurance provider and lender before applying for a loan against the insurance policy.

How Much Loan Can You Avail?

If you think that you will get a loan amount that is equal to the value of your insurance policy, you are mistaken. Most lenders will offer up to 50% of the policy’s surrender value. For instance, if the surrender value of a policy is INR 1 crore, you will be able to get a loan amount of INR50 lakh. This said, the older the policy, the higher the loan amount the lender will offer.

These are some of the essential aspects of loan against an insurance policy that you should know.

To know more about the loan against insurance policy, click here: All You Need to Know About a Loan Against an Insurance Policy

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

Financial crunches are an everyday thing now. Either you take a loan or you pay from your own pocket, you can't just escape your cash needs. Talking of taking a loan, it is quite possible to take one every time there's a dearth of cash.

However, one should not expect the same to be available at a lower interest rate every time. If you do wish to avail a loan at a lower interest rate every time, here are some tips which can help you do that.

Cross check your eligibility: Before you set your ambitions high, it would be wise to cross-check your loan eligibility. You might be eligible for a loan against mutual funds based on your own understanding of the credit facility, banks/ NBFC might have the same opinion. So, once you’re done with choosing the right lender for yourself, find out the eligibility conditions on their website.

Generally, the eligibility conditions would be as following: (1) you must be above 21 years of age, (2) must be earning enough every month to qualify the minimum income condition, (3) your CIBIL score must be up to the mark.

Mutual funds maturity value: Any lender irrespective of how flexible they are, would only approve an application asking for a maximum of 60% to 70% of collateral’s maturity value as loan. So, make sure the maturity value of mutual funds you plan to mortgage is more than what you desire to borrow.

Bottom line: Arrange all the required documents in advance. You’ll need them while applying for a loan against mutual funds online. 

To Know more about how to approve loan against mutual funds at a low rate, click here: Borrowing a Loan Against Mutual Funds at a Lower Rate Made Easy