In today’s fast-paced world, financial emergencies can arise without warning. Whether it's funding a child’s education, managing a medical emergency, or even bridging a short-term cash crunch in a business, having quick access to funds is essential.
One of the most efficient ways to raise instant funds without liquidating your long-term investments is by opting for an instant loan against securities and bonds.
What is a Loan Against Securities?
A loan against securities (LAS) is a type of secured loan where you pledge your financial investments—such as shares, mutual funds, government bonds, insurance policies, or other marketable securities—as collateral.
The lender then provides a loan amount as a percentage of the market value of these securities, usually ranging from 50% to 70%, depending on the type and risk profile of the investment.
Why Opt for an Instant Loan Against Bonds and Securities?
Here are some compelling reasons why an instant loan against securities and bonds is a great option:
1. No Need to Liquidate Investments
One of the biggest advantages is that you don’t have to sell your securities. This means you can continue to earn returns such as dividends, interest, or capital gains, while still using your assets as collateral to get a loan.
2. Quick Disbursal
Most financial institutions now offer instant or same-day loan approvals and disbursals, especially if the pledged securities are already held in demat form. Online platforms have made this process even more seamless, with some NBFCs and banks offering instant approvals within minutes.
3. Flexible Usage
Unlike a home or auto loan, which are purpose-specific, loans against securities come with no restrictions on end-use. Whether it's for a family event, travel, education, or business needs, you can use the funds as you see fit.
4. Attractive Interest Rates
Since the loan is backed by collateral, the risk to the lender is lower—resulting in relatively lower interest rates than unsecured personal loans or credit cards.
5. Overdraft Facility
Many lenders offer the loan in the form of an overdraft account. You can withdraw funds as needed, and interest is charged only on the amount utilized, not the entire sanctioned amount. This feature makes it cost-effective and convenient.
Which Securities Can Be Pledged?
The eligibility for pledging securities may vary depending on the lender, but commonly accepted instruments include:
- Listed equity shares
- Mutual funds (equity and debt)
- Government and corporate bonds
- Insurance policies with surrender value
- Exchange-Traded Funds (ETFs)
Each type of security has a different loan-to-value (LTV) ratio, and their valuation is generally done at market rates, which are reviewed periodically.
Things to Keep in Mind
Before opting for an instant loan against securities, consider the following:
- Market Risk: The value of your securities may fluctuate. If the value drops significantly, you may be asked to pledge additional securities or repay part of the loan (margin call).
- Ownership Rights: Though the securities are pledged, you remain the owner and continue to receive the returns they generate.
- Tenure and Repayment: Tenures can vary, usually ranging from 1 year to 3 years, with options for renewal. Ensure you are aware of the repayment terms.
- Processing Charges: There may be processing fees, pledge creation charges, and other administrative costs.
Conclusion
An instant loan against securities and bonds is a smart, efficient, and low-cost way to meet immediate financial needs without disturbing your investment portfolio. With fast online processing, minimal documentation, and competitive rates, it's a go-to option for individuals looking to leverage their assets wisely. As with any financial decision, it’s important to read the fine print, understand the terms, and borrow within your capacity.
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