Investing in equity shares is a popular way to build wealth and achieve financial goals. However, there may be situations where investors need cash urgently, and selling their equity shares may seem like the only option.
In such cases, taking a loan against equity shares can be an excellent alternative that allows investors to access funds without having to sell their investments.
In this blog, we will explore the benefits of taking such loans and how they can help you avoid selling your investments.
Customized loan offerings
Such loans offer customized loan offerings to investors, depending on their financing needs and risk appetite. Investors can choose the loan tenure, interest rate, and repayment options that suit their cash flow requirements and investment goals. This enables investors to avail of a loan that is tailored to their specific needs and preferences.
Loan against shares offers tax benefits to investors. The interest paid on the loan is tax-deductible under Section 24 of the Income Tax Act, up to a maximum of Rs. 2 lakhs per annum.
This means that investors can reduce their tax liability by availing of loans against shares, which can be particularly beneficial for those who are in higher tax brackets.
One of the main advantages of a loan against shares is that it provides investors with liquidity without forcing them to sell their equity shares.
Investors can use the loan amount to meet their financial obligations, such as paying for their children’s education, financing their business, or renovating their house, without having to compromise on their investment portfolio.
Higher loan amount
It offers a higher loan amount compared to other financing options. This is because the loan is secured by the investor’s equity shares, which have a higher value compared to other collateral options, such as gold or property.
This means that investors can access a larger amount of funds, which can be particularly beneficial for those who require large sums of money.
Digital platforms for loans against shares offer a high level of convenience for investors. This is why the investors can apply for the loan online, which saves them the time and hassle of visiting a physical branch.
The entire loan application process can be completed from the comfort of their home or office, at any time of the day.
Digital platforms for loans offer a high degree of transparency in terms of loan terms, interest rates, and fees.
Investors can compare different loan offerings from various lenders and choose the one that best suits their needs. They can also track the progress of their loan application and monitor their loan account online.
It typically offers faster processing times compared to traditional lenders. This is because the entire loan application process is digital, which means that there is no paperwork involved. The lender can verify the investor’s details and equity shares online, which speeds up the loan approval process.
Digital platforms typically offer lower costs compared to traditional lenders. This is because such platforms reduce the overhead costs associated with a physical branch, such as rent, utilities, and staff salaries.
This enables the lender to offer lower interest rates and fees, which can result in significant cost savings for investors.
Owing to offering a high degree of flexibility in terms of loan offerings, investors can choose the loan tenure, interest rate, and repayment options that best suit their needs.
They can also avail of top-up loans or prepay their loans without any penalties, which offers greater flexibility in managing their finances.
The lender uses advanced encryption and security protocols to ensure that the investor’s personal and financial information is protected at all times. This means that investors can apply for the loan with confidence, knowing that their information is safe and secure.
Easy tracking of loan status
Investors can easily track the status of their loan application and their loan account. They can log in to their account and view the progress of their loan application, check their loan balance, and view their repayment schedule.
No impact on Credit Score
Applying for a loan through a digital platform does not have any impact on the investor’s credit score. This is because the lender does not perform a hard credit check during the loan application process.
Instead, they use the equity shares as collateral for the loan, which means that the investor’s creditworthiness is not a factor in the loan approval process.
Quick disbursal of funds
Once the loan is approved, digital platforms typically disburse the funds quickly. In many cases, investors can receive the funds in their bank account within a few hours or days. This can be particularly helpful in cases where the investor needs funds urgently for a specific purpose.
Such loans can be a great option for investors who want to access funds without selling their equity shares. It offers several advantages, such as providing liquidity, low-interest rates, no need to sell equity shares, customized loan offerings, an easy approval process, tax benefits, no impact on credit score, and higher loan amount.