How to Get a Loan Against Securities
A loan against securities is a financial product that allows you to use your investments, such as mutual funds, as collateral to secure a loan. This method offers a quick and flexible solution for individuals who need urgent funds without the need to liquidate their investments. In this article, we’ll explain how loans against securities work, and how to get loan against securities.
What is Loan Against Securities (LAS)?
A loan against securities (LAS) is a type of secured loan where you pledge your securities, such as mutual funds, as collateral to secure a loan. This collateral-backed loan option allows you to borrow money while still retaining ownership of your securities.
Advantages of Applying for a Loan Against Securities
There are several reasons why applying for a loan against securities might be beneficial:
- Lower Interest Rate
Since your stocks, mutual funds, or other securities serve as collateral, lenders face less risk, allowing them to offer loans at more competitive interest rates. For instance, with loan against mutual funds (LAMF) via platforms like smallcase, the rateis between 10.5% – 10.9%, which is typically much lower than the rate for unsecured loans.
- Basic Eligibility Criteria
To apply for a loan against shares or loan on securities, you must meet a few basic eligibility criteria. Borrowers should have securities such as mutual funds in their demat account and must be Indian citizens aged between 18 to 70 years.
- 24×7 Access to the Account
Once you’ve applied for and secured your loan against securities, you gain 24×7 access to your loan account. This flexibility allows you to check your loan balance, make repayments, or even get customer support anytime you need.
- Flexible Repayment Options
With a loan against securities, you have flexible repayment options. You can pay just the monthly interest, making your EMIs lower. Additionally, if you choose to close the loan against mutual funds at smallcase before the 36-month tenure ends, there are no foreclosure charges.
Learn more about Frequently Asked Questions around LAMF here.
How to Apply for Loan Against Securities – Mutual Funds
A Loan Against Mutual Funds (LAMF) is a type of LAS where the borrowers pledge mutual funds as collateral. Here’s how you can apply for loan against securities online in India by using mutual funds as collateral through platforms like smallcase:
- Start by logging into the smallcase app with your credentials.
- Go to the ‘More’ section of the app and click on Loan Against Mutual Funds.
- Click the ‘Apply Now’ button to initiate the application process.
- Provide your Date of Birth (DOB) and PAN card details. You’ll then be asked to verify your identity with an OTP.
- After checking your credit limit, decide on the loan amount you wish to apply for.
- Link your bank account to complete the process.
- Choose the mutual fund units you want to pledge. Remember, once pledged, these mutual funds cannot be sold until the loan is repaid.
- Finally, sign the digital agreement to complete the loan application.
This simple 5-minute process allows you to get an instant loan against securities, without the hassle of selling your securities. Learn more about the eligibility criteria and necessary documentation here.
Interest Rate & Processing Fees
The interest rate for loans against securities is 10.5% – 10.9%. can vary based on the type of security you pledge and the platform you use.
The processing fees are ₹999 or 1% of the loan amount, whichever is higher up to a maximum of ₹4,999.
Conclusion
A loan against securities is a flexible and quick way to access funds without having to sell your investments. If you need urgent funds, applying for a loan on securities can be an excellent choice, especially with platforms that offer instant loans against securities. Always compare the interest rates, processing fees, and terms before making a decision.
All About Loan Against Securities & Loan Against Mutual Funds on smallcase –
smallcase offers quick and easy disbursement of loans against mutual funds ( LAMF). Explore all about the eligibility criteria, documents required, features, and benefits of a Loan against mutual funds on smallcase
Frequently Asked Questions About LAS
At smallcase, you can pledge a range of mutual fund holdings as collateral.
The loan amount depends on the value of the mutual funds you will keep as collateral. You can avail a loan against mutual funds from ₹25,000 onwards.
No, there are no prepayment penalties or foreclosure charges for loans against mutual funds at smallcase.
Once your application is approved and the process is complete, the funds are typically disbursed to your bank account within a few hours.
When you repay part or all of the principal, your credit limit is reinstated. You can then withdraw any amount starting from ₹1,000 up to the total repaid principal, without needing to apply for a new loan. Interest is charged monthly on the amount withdrawn.
