5 Easy Rules to Make a Loan Against Securities

LAS lets you use assets like stocks, mutual funds, and bonds to get a loan. Lender evaluates collateral's value based on market value and your credibility. Factors like risk and market conditions influence the loan amount.

What is a Loan against securities (LAS)?

Choosing the Right Lender

Choose a lender that accepts diverse assets to improve creditworthiness. Seek competitive rates and fees. Be cautious of banks offering large loans based on collateral. Most lend 60-80% of collateral value, limiting loan amounts. For instance, using INR 20 lakh mutual fund units may secure a loan of INR 16-18 lakhs.

Choose The Right Collaterals And Maximize Variation

Expand your collateral options to boost loan potential. Choose securities wisely based on risk and benefits. Stocks are volatile, so consider stable assets like bonds or insurance policies. Fluctuating stock values may require additional collateral to meet margin requirements.

Smart Loan Repayment Plans

Match loans with your repayment capability. Assess options with a financial adviser. Plan loan amount and tenure wisely. Choose lenders offering flexible repayment options tailored to your needs.

Prepare Loan Documents

Getting a loan against securities is simple. Keep necessary documents ready for a smooth process. KYC documents like ID proof, income proof, and demat account details are essential.

Watch Out for Extra Charges

While loans against securities (LAS) offer benefits, be mindful of hidden fees. Expect processing, pledging, and renewal fees. Additional charges may include ATM, cash deposit/withdrawal, and transaction fees. Be aware of these costs before proceeding with LAS.