When facing a financial crisis, it can be tempting to sell some assets. If you sell out of distress, you may lose money and waste your investment efforts. A loan against securities might be the answer to your dilemma if you need cash from your investments without liquidating them.
Shares, mutual funds, and bonds can be pledged as collateral for loans against securities. There are no foreclosure or prepayment charges, and the process is instant and safe.
By pledging your investment securities to a lender, you can get a loan from a bank or non-banking financial institution. As a result, you don’t have to sell your investment instruments in a hurry, especially when you need funds urgently during an emergency. These instruments can instead be pledged as collateral to a lender to get the funds you need. Lenders figure out how much you can borrow based on the value of the securities you put up as collateral. A loan against securities is usually based on a certain percentage of the securities that are put up as collateral. The rules for this are similar to those for a loan against real estate. The interest rate for a loan against securities is also based on how long it takes to repay the loan.
Loans against shares are loans secured by equity or any other financial security; Rurash Financials can help you get a loan against securities from a list of over 800+ pre-approved securities.
We aggregate loans against security as per the individual case, loan requirements and investment portfolios keeping in mind the financial goals of the investor. The designated loan officer from Rurash Financial will recommend and facilitate loans against shares from the most trusted lenders in the industry.
In case larger amounts are required against securities and investments, the loan officer from Rurash Financials will help you source the amount from more than one or two lenders as per your securities and collateral.
Individuals are offered loans based on the market value of the shares held in a Demat account.
They are short-term loans with relatively small loan amounts. It is possible, however, for these loans to be longer in duration or to be larger in amount. Loans can be repaid over a period of six to 36 months, depending on the circumstances.
There are a number of banks that offer this type of loan up to a limit of Rs. 20 lakh; however, Rurash Financials can connect you with the concerned banks in a personalized manner so as to allow you to avail of a loan against security for any amount between Rs. 10 lakh and Rs. 100 crores. Depending on the market value of the shares, a loan of up to 50% of the market value is generally available. Repayment of the loan can be flexible. As the borrower repays the interest, the principal may be deducted from the collateral. This whole process can be tiresome for a few, but with Rurash, you get more personalized care with a dedicated relationship manager to assist you in every step of your process, from application to disbursement, so that you can get the funds you require in times of need or emergencies.
By leveraging their existing investments, investors can raise funds through loans against securities. During the loan term, the borrower keeps getting things like interest, dividends, bonuses, etc. Long-term investors will find this loan facility to be an excellent option. Without jeopardizing their long-term financial objectives, they can meet their short-term fund shortfalls.
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Meet Mr. Umang, a business owner based out of Noida. He was looking for LAS funding of Rs. 50 lacs to expand his business. Despite checking the entire market for this, he couldn’t get a positive response since he had multiple Demat accounts with a discount broker alone, where the pledging process was complicated and required technical knowledge. This is not a story, but a disappointing reality that most investors and borrowers may face. A complicated process, little clarity, and no handholding make pledging shares challenging! But not when you reach out to one of India’s top investment management firms, Rurash Financials to rest your case. A major benefit of Rurash Financials is that it lends to multiple lenders on a single platform, while also providing a human touch.
What did we do to bring Mr. Umang out of his misery?
Firstly, we did the assessment of the case and segregated his portfolio to meet his funding requirement.
Secondly, we solved all the queries raised by Mr. Umang & lending partner and gave him a proposal of LAS from a leading NBFC.
Lastly, we guided him through each step of the process until he received the loan.
We earned a happy client.
We at Rurash Financials bring you secured and quick financing starting from 10 lacs to 100 crs. depending upon the securities. With Rurash Financials, you’ll be able to get customized loan solutions based on your investment portfolio and needsalong with several benefits. Here’s a glimpse:
Share loans have lower interest rates than personal loans or other unsecured loans because they are secured. As a result, this facility is very popular. While major banks and NBFCs usually charge an interest rate as high as 15%, Rurash Financials can assist you in availing of Loan against security at an Industry lowest interest rate of 9%
A loan may be used for any purpose by the applicant. Just like personal loans, lenders don’t ask what the loan will be used for before agreeing to give it. A home purchase, a debt repayment, or a medical emergency can be covered with this money.
The majority of lenders who offer loans against shares have a one-year minimum term that can be extended by paying a certain amount. Due to the short term, lenders do not charge prepayments.
Having examined some merits, let’s take a closer look at some demerits. Below are some demerits listed for taking loans against shares.
Lenders make offers based on the value of the shares pledged by borrowers seeking loans against them. However, because lenders only offer upto 50%-85% of the value of the security, depending on its nature, the amount sanctioned in the borrower’s account may be less than the stock’s worth. Compared to traditional assets like immovable property, financial assets like shares are riskier due to the volatility of the stock market.
As lenders examine the applicant’s database, they often pay attention to the company whose stocks are being pledged. If the company does not appear on the list of lenders, the loan application will be denied. The borrower must therefore review the list of companies before applying.
The borrower loses a certain amount of control over equities after getting a loan. As a result, if they wish to sell their shares at a later date for a profit, they will be prohibited from doing so by the loan. If the borrower pays off the loan, he or she will gain complete ownership of the stocks.
As long as the bank has placed a lien on the shares, the borrower will not be able to sell them if the stock market rises.
Consequently, they may lose out on the opportunity to sell the stock for more. Also, if the borrower can’t pay back the loan, the bank may be able to sell the shares, which means that blue-chip stocks will be lost.
Certain precautions must be taken when granting advances.
If you need cash quickly, you can get a loan against your investments without selling them. Despite being pledged by the borrower, the investments earn dividends and profits. Since these loans do not have monthly payments and the terms for paying them back are flexible, it is not a good idea to sell assets quickly. With Rurash Financials, you’ll be able to get customized loan solutions based on your investment portfolio and needs. By taking out a loan and pledging your securities with Rurash Financials, you will be able to benefit from the most competitive interest rates. ( as low as 9%)
Rurash Financials is one of India’s top investment management firms, providing financial solutions to augment the client’s wealth and facilitate building a legacy. For any guidance regarding financial instruments, Connect with the relationship manager now or write to: firstname.lastname@example.org