Sometimes, you may find yourself in an emergency situation requiring immediate financial assistance, but you’re either unfit to give feasible collateral or you don’t wish to put up anything of value as collateral. In such situations, a loan against securities can be a perfect overdraft facility to beat the financial crisis.
Loans against securities are basically an overdraft installation and are secured loans therefore
- Attestation and processing are quick and fast; with proper documentation the amount can be disbursed in 24-48 hours.
- Though it has a one-year tenure, it’s also renewable.
When in need of financial assistance, taking a loan against securities can be a viable option. However, it’s essential to consider certain factors before proceeding with such loans. This article aims to shed light on the key aspects to remember when contemplating a loan against securities or shares.
Understand Loan-to-Value (LTV) Ratio
The loan-to-value ratio determines the maximum loan amount you can secure against your securities or shares. LTV ratios vary across financial institutions, so it’s crucial to familiarize yourself with the specific requirements of the lender you approach. Knowing the LTV ratio helps you gauge the loan amount you can expect and plan accordingly.
Evaluate the Eligible Securities/Shares
Not all securities or shares may be eligible for a loan. Banks and financial institutions typically have a list of approved securities or shares that they consider acceptable collateral. Before proceeding, confirm whether your securities or shares fall within the lender’s approved list to ensure a smooth loan application process.
Assess the Loan Tenure and Repayment Terms
Loan tenures and repayment terms can significantly impact your financial obligations. Longer tenures may offer lower monthly installment amounts, but they may also accumulate more interest over time. Shorter tenures, on the other hand, may have higher monthly payments but can help you repay the loan faster. Analyze your financial capabilities and choose a loan tenure and repayment plan that aligns with your needs and preferences.
Understand the Risks Involved
While a loan against securities or shares can be advantageous, it’s essential to be aware of the risks involved. If the value of your securities or shares declines significantly during the loan tenure, the lender may require additional collateral or sell your assets to cover the loan amount. Carefully consider the potential risks and fluctuations in the market before proceeding with the loan.
Compare Interest Rates and Charges
Different lenders may offer varying interest rates and associated charges for loans against securities or shares. It’s advisable to compare the rates, fees, and charges from multiple financial institutions to ensure you secure the most favorable terms. A comprehensive comparison will help you make an informed decision and potentially save money in the long run.
Seek Professional Advice
If you’re unsure about any aspect of taking a loan against securities or shares, it’s wise to seek advice from a financial advisor or a knowledgeable professional. They can provide personalized insights based on your specific financial situation and guide you in making informed decisions.
Taking a loan against securities is an excellent option to taking out a particular loan, as well as a better volition to standing your financial securities to meet your liquid cash conditions. Especially in situations where the exact cost or expenditure is unknown, these are salutary. likewise, prepayment plans are flexible and can be acclimated according to the borrower’s fiscal situation. Interest is only charged on the portion of the sanctioned quantum that’s actually employed.
The minimal amount for a loan against security is Rs 10 lakh, and Rurash Financials facilitates it up to Rs 100 crores and indeed more which is generally 80 of the total request value of the securities pledged and help you find trusted lenders that bring Quick and Secured Financing, with interest rates as low as 9% at the lowest processing charges, and the ability to choose or change pledged securities.