A Brief Understanding Of Loan Against Shares

Posted by karan saxena on August 25th, 2018

So, you have decided to send your daughter for higher studies abroad. The question arises how do accumulate the funds to do so? So, you think of selling off your shares or mutual funds to meet your requirements. The question arises, is it a wise decision to do so? Or, are there any alternative methods where you do not sell your funds and shares and yet receive a payout?

The answer is yes. There is a scheme where you can get a loan sanctioned by leasing your shares and mutual funds. This process is called as a loan against the mutual fund. Loan against shares involves you surrendering your shares, life insurance policies or mutual funds as security to the bank against the loan amount you wish to procure.

So how does the loan against shares or securities work? Let’s take an example. Lets’ say, you are offered a loan against shares of Rs 2 lakhs. Now you draw only Rs 50,000. Later, you deposit the same amount back in your account in one month. In such a case, you are now liable to pay interest only for one month on Rs 50,000. The amount of loan you can apply for simply depends on the number of collaterals of shares and bonds you are willing to offer.

The market is now also offering digital loan against securities. This is a novel concept that is automated and helps fast track the loan against securities process. The process needs to be completed online and takes just a couple of minutes. This proves beneficial to people to avail loan remotely and does not require physical presence in a bank.

Some of the benefits of loan against securities are stated below; the disbursal of a loan amount is immediate if done via net banking. They contain a low-interest rate. There is no paperwork hassle. The best part being you pay the interest of only the amount you used. There is no repayment penalty. You are eligible to set your own loan limit (the range being from 1 lakh to 20 lakhs).

To help you out with securing a loan through a loan against mutual funds, you could get in touch with JMFL Institute. They are the ideal medium who can help you secure a loan against your securities. Their experts have successfully managed to procure loans for many of their clients. They also offer varied financial services for individuals as well as corporates. Do visit their website and see the various offerings they have in store.