Navratri always brings festivities, along with the big shopping festivals, offers, new clothes, ornaments, gifts, home renovations, and other big purchases. Chances are your email and SMS inboxes, as well as WhatsApp inboxes, are filled with festival offers from banks and NBFCs.
Many banks and NBFCs come up with attractive offers and deals on loans to make festival expenses less burdensome. Festive loans are similar to personal loans, but they cost less than most personal loans. But even at a lower cost, is it wise to take a personal loan instead of a loan against securities?
Loan Against Security-An Instant Liquidity
A loan against securities, or LAS, is a secured loan availed by pledging your securities in your Demat account as collateral with a lending partner. A loan against securities allows investors to raise funds by using their existing investments. One major advantage is that even with the securities pledged; the borrower continues to receive dividends, bonuses, etc. Loans against securities serve as an excellent alternative to personal loans in times of need to cover your short-term fund shortfalls, especially during the shopping and festive seasons.
Why Go for A Loan Against Securities and Not A Personal Loan
No restrictions on end usage funds
Loans against securities do not restrict the end use of funds, except for speculative purposes. You can easily use your loan proceeds for any number of purposes, from shopping to buying a home or a vehicle.
Offered as an Overdraft
A loan against security is offered as an overdraft facility, and the credit limit sanctioned depends upon the pledged securities. Since it is an overdraft, the borrower has the liberty to use the entire sanctioned limit or parts of it as needed. The borrower also has the liberty of choice of drawing from the given sanctioned limit and also repaying it as many times as needed until the expiry of the loan. Moreover, the interest component is only charged on the amount drawn until the repayment.
Periodic revaluation of pledged securities
Since market-linked securities are subject to market volatility, lenders periodically revalue pledged securities. A lender might conduct an interim revaluation of the securities during market corrections. If a market correction leads to the drawn amount being greater than the sanctioned limit, then the borrower will have to compensate for the difference amount either by pledging more securities or paying the difference amount via cash or cheque.
Flexible repayment with no prepayment charges
Since it is an overdraft facility, the borrower taking a loan against security is required to service the interest component monthly. The principal component can be repaid up to the tenure of the overdraft facility, depending upon the borrower’s cash flow. This takes away the EMI burden. This, along with the no prepayment charges, makes availing of a loan against security less burdensome than other forms of secured or unsecured loans.
The credit score is one of the primary filters lenders apply when they receive your application to assess your creditworthiness, especially in cases of personal loans. However, when it comes to loans against securities,
Don’t let the shortage of funds take away your festive cheer. Considering and opting for a loan against securities allows you to leverage the investments you have in your Demat account and put them to use for instant liquidity without needing to sell them.
Rurash can easily help you in getting a loan against security in times of not just your shopping needs but also emergencies, at an incredibly low-interest rate of 8%, where you can pledge more than 800 approved securities. This way, even if you have an insurance policy, UTI bonds, or even mutual funds units, you can easily avail of a loan against security.
Rurash Financials is amongst India’s tech-driven investment management companies, providing financial solutions to augment the client’s wealth and facilitate building a legacy. We cater to financial services, including customized investment solutions, wealth management, NRI Investments, Loan Against Securities and Fixed Income Investments.
For any guidance or inquiry on loans against securities, please reach out to us at: email@example.com,