Investing in financial securities, like shares, mutual funds, bonds, etc., not only adds to the investor's overall net worth but is helpful to avail of a loan for immediate financial needs. Here are crucial aspects to consider while applying for a loan against securities:
1. Check the Eligibility Criteria
Loan seekers should meet the eligibility criteria before applying for a loan against shares. The eligibility criteria differ for individuals and businesses. Therefore, know the lender's eligibility criteria first. An individual's minimum age must be between 21 years to apply for a loan against shares. CIBIL score should be 650+.
2. Check if the Securities Come Under the Approved List
A wide range of financial assets can be pledged with lenders to get a loan. Lending institutions have a list of financial assets to provide a loan against securities. Therefore, while researching lenders, loan-seekers need to ensure that their securities are on the lender's list to sanction a loan.
3. Loan Amount and Interest Rates
Individuals must research the market to find a lender giving a high loan amount at comparatively lower interest rates. Renowned financial institutions and lenders, like non-banking finance companies (NBFCs), can offer up to 50%-85% depending on the securities to be pledged.
4. Documentation
Lenders ask for a few important documents from the loan applicant. They should keep these documents handy while applying for a loan. Here is the list of required documents:
- PAN Card
- An identity Proof
- Address Proof
- Ownership proof of pledged securities
- Bank Account Statement
- Income Proof
Considering these aspects, one can easily avail of a loan against securities and overcome a short-term financial crunch.
