Tuesday 23 April 2024

What is a Loan Against Securities: Definition and Meaning

There may be times when you may need a higher amount of money but don’t know what to do.

Asking money from friends and relatives and even applying for a personal loan could be some of the quick solutions to your needs. But, even friends and relatives may not give you a higher amount of loans and that too quickly.

On the other hand, even availing a personal loan may give you the desired amount. But doing that will mean paying higher EMIs due to increased personal loan rates.

So, what is the next solution so that you can get a higher value of the loan at a lower rate? If you have invested in some shares, bonds, mutual funds, IPOs and more, you can apply for a loan against securities and enjoy a lower LAS interest rate.

If you are unaware of the loan against securities facility, let us provide you with some quick insights.

What is the loan against securities facility?

The loan against securities is available as an overdraft facility which gets pledged against some financial securities. These securities could be shares, bonds, mutual funds, IPOs and more such vehicles.

The loan against securities is basically a loan which is offered to you when you keep one of such securities as collateral against the loan amount. The loan against securities is one of the best ways to make your investment work for you without liquidating them.

Since one of your securities is pledged and kept as collateral, the availed loan has a lower LAS interest rate. When you have a lower interest rate to worry for, you can easily pay lower EMIs meaning easier management of the monthly outlays.

Loan against securities eligibility criteria

You need to prove your eligibility to apply for a loan against securities such as:

➢The applicant needs to be an Indian citizen
➢Your age should at least be 21 years
➢You need to be a working individual with a consistent flow of income at your disposal

Loan against securities documents at a glance

Along with eligibility terms, you will also need to furnish some documents such as:

✓ID proofs
✓Address proofs
✓Document proofs for to be pledged securities
✓Recent passport size colour photograph

Loan against securities benefits

When you apply for a loan against securities, you get to open a gateway of benefits such as:

●Higher loan amount to cover all your personal, business and many more needs
●Relationship Manager’s assistance 24/7 by lenders for you so that you can raise a query about the LAS that you have availed
●You need not to pay any charges for prepaying or foreclosing the loan against securities account before time
●Lenders also let you access all the LAS account details via their digital customer portals to help you track it from anywhere and 24/7

The Bottom Line

The loan against securities can work wonders for you if you need some urgent money at a lower rate of interest. If you need some urgent cash flow for your numerous needs, you can look up to the loan against securities and apply online.