7 Things To Know While Taking Loans Against Shares
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Seven essential things to know when taking a loan against shares to fund emergency expenses without liquidating blue chip shares.
Welcome to FundooMoney, your 24X7 buddy for all your money matters! An emergency at home or any other urgent need for cash can have you scampering around. In such situations one source of funds can be a loan against shares. You can go for such a loan instead of making a premature exit from shares which may either lead to losses. Or, you may end up surrendering hard-earned gains from long term investing for future needs like children’s higher education and your retirement. They are also cheaper than credit card debt or personal loans. But you need to keep in mind a few things when you go for loans against shares. We will get into to them but in just a little while.
Here are some important things to know when taking a loan against shares. • It is offered both in the form of term loan or an overdraft
• Loan amount could range from Rs 50,000 to Rs 20 lakh
• Loans are offered only against a pre-approved list of shares by the bank
Each bank has a different list. Typically the list contains top 500 to 700 shares
• Loan amount would not be more than 50% of the value of the shares at the prevailing market price
• The loan is available only against shares which are in the demat form
• Lien would be marked electronically which will prevent you from selling the shares unless lien is removed on loan repayment
• The interest rate on such a loan is typically higher than auto loans but and less than personal loans
We hope you found this useful. Are there other important things to remember while taking a loan against shares? Do share them with us and others in the channel by writing in the comments section. For more such actionable personal finance information, subscribe to our channel. Also, visit our website, download our mobile app and stay connected with us on Instagram, Pinterest and Slideshare.
