The title of yoThe basic guide to taking a Loan against shares - Abhiloansur publication

The Basic Guide to Taking a Loan against Shares Selling out your shares or liquidating your assets is not the only option to cater to your urgent fund requirements. You may better deal with the situation by pledging your stock market investment against the funds you want to raise. And this concept of taking a loan is known as a loan against shares or a loan against securities.

Redeeming your equity shares in haste could lead to financial losses, and your investment efforts and plans may go in vain. If you are in the dilemma of how to raise instant funds against your stock market investments without liquidating them, here is all you need to know about loans against shares. But first, let us understand what a loan against shares or securities is.

A look into a loan against shares A loan against shares is a type of loan against securities that gives borrowers the advantage of raising quick funds against their stock market investment. While taking such a loan, the borrower pledges his equity shares as collateral to a bank or financial institution. Loans against mutual funds, stocks, shares, and other financial securities work as overdraft facilities, allowing borrowers to pay interest only on the amount they have drawn. The process is quick and safe.

How it work?

The lender opens an OD account in your name and circulates the interest rate based on the amount you withdraw during the period of utilisation. You need not pay the interest on the entire amount.

The best part is you get steady cash in your account after pledging your shares as collateral. Plus, you continue to acquire the benefits from your investment.

The loan size The loan size is usually up to 50% of the value of the shares pledged. However, in some cases, the lender can consider giving you a higher amount, depending on the type of share.

The interest rates Interest rates on loans against securities depend upon the type of securities pledged; and the type of loan applied, i.e., whether it is a term loan or an overdraft. For overdraft, the interest rate goes up to 16%. It is prudent to compare the interest rates of different institutions and negotiate for the best.

The loan tenure The duration of a loan against stocks and shares generally range from 6 to 36 months. Borrowers may also choose to extend it by paying the interest of the previous amount or pledging more shares as collateral based on their requirements.

Charges & fees applicable Some institutions levy certain charges, such as processing fees, foreclosure charges, pledging fees, etc., for loans against shares. Some lenders, including Abhi Loans, relieve you from the worry of

pre-payment charges. They give you the freedom to pay at will. So, it is advisable to head to such a lender.

Where can you go to take a loan against shares?

If you are seeking a lender that offers low EMIs, instant approval, flexible amounts, and a paperless application process, there could be no better option than Abhi Loans.

The Process The application process for a loan against shares is super easy. You need not hand around or visit multiple premises. You may even apply it online, as most financial institutions have a digital presence nowadays. And if you choose Abhi Loans as your lender, you may get the loan against shares in four easy steps, with disbursal in just 4 hours.

Documents required Taking a loan against shares requires bare minimal documentation. You need to submit a PAN card, address proof (Aadhaar/Driving License/Passport/Voters Id), a passport-size photo, and bank proof.

This handy guide shows that taking a loan against shares is quick, safe, and straightforward. By keeping these points in mind, you will be able to make a better decision when applying for a loan against securities.