A Loan Against Securities (LAS) is a type of loan where individuals can borrow money by pledging their financial securities, such as stocks, bonds, or mutual funds, as collateral. This option allows borrowers to access funds without having to liquidate their investments. The loan amount is typically a percentage of the market value of the pledged securities, providing a quick and flexible source of funding. LAS is beneficial for short-term financial needs while still allowing the borrower to benefit from potential gains in their investment portfolio. For more details, check out our section on Loan Against Shares.
Benefits of choosing a Loan Against Securities
- Quick access to funds: Obtain financing swiftly without selling your investments.
- Retain investment ownership: Continue to benefit from any appreciation in the value of your pledged securities.
- Lower interest rates: Generally offers lower interest rates compared to unsecured loans.
- Flexible repayment Options: Tailor the repayment schedule according to your financial situation.
- Use for multiple purposes: Can be used for various needs such as business expansion, medical emergencies, or education.
Key features of the cheapest Loan Against Securities
- Competitive interest rates: Low interest rates compared to other loan types.
- High loan-to-value ratio: Borrow a significant percentage of the value of
- your securities. Loan against shares can be provided upto 50% LTV.
- Flexible tenure: Choose a repayment period that suits your needs.
- Minimal documentation: Quick processing with fewer documentation requirements.
- No prepayment penalties: Repay the loan early without additional charges
For more information, refer to our detailed section on Loan against Securities
Eligibility criteria for a Loan Against Securities
To qualify for a Loan Against Securities, applicants must meet certain eligibility criteria. These typically include:
- Age: Must be between 21 and 65 years.
- Ownership of securities: Must own eligible securities such as stocks, bonds, or mutual funds.
- Income proof: Proof of a stable income source to ensure repayment capability.
- Credit score: A good credit score to qualify for better interest rates.
Documents required for a Loan Against Securities
Here are the documents typically required for a Loan Against Securities (LAS):
1. KYC Documents:
- Aadhaar Card
- Passport
- Voter's ID
- Driving License
- Letter of National Population Register
- NREGA Job Card
2. PAN Card:
- Proof of PAN for the applicant
3. Demat Holding Statement:
- Statement showing the securities pledged as collateral for the loan.
How to apply for a Loan Against Securities
Applying for a Loan Against Securities involves the following steps:
- Evaluate your securities: Assess the value of the securities you want to pledge.
- Choose a lender: Compare lenders to find the best interest rates and terms.
- Submit application: Complete the loan application form provided by the lender.
- Provide documentation: Submit necessary documents such as identity proof, address proof, and ownership proof of the securities.
- Loan approval: The lender evaluates your application and may approve the loan based on the value of your securities.
- Disbursement: If approved, the loan amount is disbursed to your account.
Features of Bajaj Finserv Loan Against Securities
Bajaj Finserv offers a range of features for its Loan Against Securities (LAS) product, making it a convenient and attractive option for borrowers:
- Quick disbursement: Bajaj Finserv is known for its quick loan processing and disbursal, enabling borrowers to access funds promptly.
- Digital processes: The application and loan management processes are often streamlined and digitized, allowing for a convenient and hassle-free experience.
- Competitive interest rates: Bajaj Finserv typically offers competitive interest rates on its LAS products, making it a cost-effective borrowing option.
- Flexible repayment options: Borrowers may have the flexibility to choose repayment schedules that suit their financial needs, such as equated monthly installments (EMIs) or interest-only payments.
- Wide range of collateral options: You can pledge various securities as collateral, including stocks, bonds, mutual funds, and other eligible assets.
- High Loan-to-Value (LTV) Ratio: Bajaj Finserv often offers a high LTV ratio, allowing you to borrow a significant portion of the value of your pledged securities.
Comparison of Loan Against Securities with other loan options
| Feature | Loan Against Securities | Personal loan | Home loan |
| Interest rates | Lower | Higher | Moderate |
| Collateral required | Yes | No | Yes |
| Loan amount | Depends on securities | Fixed | Based on property value |
| Processing time | Quick | Moderate | Longer |
| Repayment flexibility | High | Moderate | High |
Interest rates and charges on Loan Against Securities
Following are charges levied by Bajaj Finance Ltd on Loan Against Securities-
| Charge/Fee | Description | Percentage |
| Interest rate | The annual percentage rate (APR) charged on the loan amount. This rate can vary based on factors like the type of securities pledged, creditworthiness of the borrower, and market interest rates. | 8% to 15% per annum |
| Processing fee | A one-time fee charged to process the loan application. | Up to 4.72% of the loan amount |
| Prepayment charges | A fee charged if you decide to repay the loan before the agreed-upon tenure. | Up to 4.72% of the outstanding loan amount |
| Bounce charges | A penalty fee charged for delayed payments. | Rs. 1,200 per instance of dishonored payment instrument or missed installment. |
| Maintenance charges | fee charged by the lender to cover administrative and operational costs. | Up to 1.18% of the sanctioned loan amount. |
For additional information on leveraging investments, check out our guide on Loan Against Shares
Conclusion
In conclusion, profit sharing plans and loans against securities both offer unique benefits for individuals and businesses. Profit sharing plans align employee interests with company success, fostering motivation and loyalty, while loans against securities provide quick, flexible funding without liquidating investments. Understanding the eligibility criteria, key features, and benefits of these financial tools is crucial for making informed decisions. Implementing these strategies responsibly ensures not only financial growth but also trust and stability. By leveraging these opportunities, businesses can enhance their financial health and employee satisfaction simultaneously.
