Loans Against Shares: Features and Benefits
Loans against shares are a unique financial product that enables investors to use their existing share holdings as collateral and borrow funds against them. This type of loan comes with a variety of features and benefits that can be beneficial for investors. In this article, we will look at the features and benefits of loans against shares.
Features of Loan Against Shares
Check out the following features of loan against shares:
- You can use your existing shares as collateral to borrow funds when required.
- The amount extended to you will depend upon the current value of the shares you are pledging
- You can get the loan via an overdraft facility or a demand facility. With the overdraft option, you will have an overall limit of funds from which you can withdraw as much as required. You will only have to pay interest on the amount withdrawn. If you opt for the demand facility, you will be extended the entire amount in one go and must repay it, along with interest, via EMI payments each month.
- While you have pledged your shares as collateral, you cannot redeem them. However, you are entitled to dividends earned on the same and the units will remain in your account.
- Once you repay the borrowed amount, you will have complete authority over your shares.
What are the Benefits of Loan Against Shares?
The numerous advantages of loan against shares are as listed below:
- Since you are pledging your shares, you are not required to provide income proof and nor your credit score is considered. This makes applying for a loan relatively easier.
- Now loan against shares is also available through online journey hence if you can avoid the excessive documentation and credit reports which greatly speeds up the process of disbursements. With some lenders loan journey is completed within 15 mins and loan amount is credited to your OD account at the same time.
- As you are pledging your shares, the loan is deemed to be a secured one. Thus, the risk undertaken by the lender is greatly reduced and you can enjoy relatively lower interest rates.
- You get to enjoy flexibility when it comes to borrowing the funds and the repayment method.
- You can continue to reap the rewards of your investment even while they are pledged as collateral with a lender.
- You can also apply for a loan against shares online or digitally with a simple process.
Loans against shares are an attractive way to access funds without compromising on your investments. With the right loan provider, you can access funds almost immediately, at competitive interest rates, and with flexible repayment terms.
Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.