A growing number of investors and individuals seeking immediate liquidity are taking out share-secured loans. This financial product allows you to obtain a loan by leveraging your stock holdings without having to sell any of them. This post will explain what a Loan Against Shares is, how it operates, its advantages, qualifying requirements, and more.
What is a Loan Against Shares?
One type of secured loan is a loan secured by equity shares. By pledging your shares, you can increase liquidity instantly. By using our shares as collateral, you can obtain cash quickly and easily. Money is immediately deposited into the bank account you have linked as soon as the loan is approved. You only pay interest for the days that you use it, and you pay 10.5% p.a. on the amount you have used. You can also make a prepayment toward the used amount without incurring any fees if there is extra money available. You retain ownership of the stocks and all associated benefits even if you pledge your shares to cover the overdraft limit.
Features & Benefits of Loan Against Shares
- Get LAS Limit the same day: Days of waiting are not necessary! Using the MAFS mobile app, you can take a few easy steps to obtain an overdraft limit against shares that same day. You can access your overdraft limit that same day thanks to our instant processing.
- Zero Prepayment/ Foreclosure Charges: If you choose to pay off your outstanding debts early, there are no lock-in, prepayment, or foreclosure fees.
- Instant Disbursal: Make money available to you whenever you need it. Have the required sum directly credited to the bank account you have specified that same day.
- 100% Digital Process: No need to contact relationship managers or go to branches. Without submitting hard copies of your documentation, you can finish the entire application process through our mobile app.
- Retain Ownership: Allow the profits from your share investments to continue. You continue to own your shares and benefit from all of their features.
- Attractive Interest Rate: A loan secured by shares is offered by Mirae Asset Financial Services at a rate of 10.5% per annum with a flexible payment schedule. Interest is only charged for the days and the amount that you use.
- Easy Repayment: Have more freedom in how you handle your money. The principal can be paid back at any point during the loan term, and you will only be required to make interest payments each month, which are determined by your usage.
Eligibility and Documentation
- Age between 18 years to 70 years
- Non-resident Indians are not eligible
- Must have an active demat account
- Indian Citizens having a valid PAN card and Aadhaar card
- Shares and Mutual Funds in Demat form must be as per Chola’s policy
How to Avail Loan Against Shares?
- Visit any broker website.
- Request a Loan Using Shares
- Finish the one-time KYC registration process using your PAN and Aadhaar information (if your Aadhaar is connected to your mobile number, Digilocker will provide the information directly).
- Use the NSDL DP ID to pledge shares. (Once your pledge is successful, your DP will let you know.)
- Note that the pledge will only be effective during business hours.
- Use e-mandate to verify your bank account online.
- Go online and read and sign the loan agreement.
- Your overdraft protection is available.
Conclusion
A share-secured loan is an excellent way for investors to increase the value of their stock holdings without having to sell them. This financial product increases liquidity while preserving share ownership by providing easy access to funds, flexible repayment plans, and no prepayment fees. It is ideal for short-term financial needs.