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When you find yourself amidst a financial emergency, the urge to sell a few financial assets can be tempting. Selling out of distress could lead to financial losses and make investing efforts go down in vain over the years. If you are stuck in a dilemma where you need cash against your investments without liquidating them, you should look into Loans against Securities.
Loans against Securities work as overdraft facilities that one can avail by pledging shares, mutual funds or bonds as collateral. The process is instant and safe, and you don't have to worry about foreclosure or prepayment charges.
Here's everything you should know before obtaining a Loan against Securities:
The ownership of financial investments is a crucial safety net for all organisations. It becomes vital to explore financing options that help you get financial assistance in trying times or stages of growth without jeopardising ownership of investments. That's where a Loan against Securities comes into the picture.
When one has investments in securities and is facing financial problems, the only solution they tend to see is liquidating these shares or bonds. With a loan against securities, you can instantly access the funds you need without liquidating the assets and investments you have spent years building. You can then use the amount you receive against these investments to meet your organisation's immediate and near-future needs.
Additional Read: Loan against Shares: A Guide
A loan against securities also allows you to pay interest only on the funds that you utilise. The ease of repayment makes the loan process more accessible for businesses looking for stop-gap funds.
Tata Capital gives you the option to repay the loan with flexible EMI options, without any prepayment charges. Each month, you have to pay interest on the amount you have utilised. You don't have to repay the principal amount until the end of the term.
Even if you have decided on one security, you can switch it up with another equally valued asset that may financially benefit you more during the loan application process or tenure. You can make the most of this flexibility by discussing all your options in detail with Tata Capital representatives.
Suppose the situation arises that you need a top-up over the loan amount sanctioned. In that case, you can avail of it easily in the case of a Loan against Securities by pledging more shares, mutual funds, and securities.
By pledging securities with Tata Capital, you can get easy and quick access to funds worth Rs 20 crore through Loans against Securities.
The calculations consider your investment's market value, organisation's credit history, current leverage, trade reputation, and other relevant factors. You can get loans against securities up to 50% of the market value on approved scripts and up to 70% of the Net Asset Value of mutual funds.
Since you don't have to pay interest on the entire loan, just the amount utilised, the process gives you more control over your financial situation.
For example, if you have taken a loan of Rs 10 lakh, but you only used Rs 2 lakh, you would have to pay interest on just Rs 2 lakh even though you will have quick access to the balance amount if needed.
It makes Loan against Securities different from other traditional loan options as it involves low risk and way more benefits.
Additional Read: How Does a Loan Against Security Work?
To access loans against securities, you must submit the KYC documents and investment proofs. The process requires minimal documentation and basic mandatory information.
You don't have to wait around or visit multiple premises. You can go to the Tata Capital website and start the application process by selecting the loan amount, tenure, and details of financial assets you'd like to pledge. The solution is tailor-made as per your specific financial needs. The interest rates are competitive, the credit assessment is swift and secure, and your convenience is at the core of the entire loan sanctioning process.
Loans against securities prove to be a feasible and advantageous option when you have idle investments in shares or mutual funds and need funds. With a loan against securities, you can avail of a loan amount without liquidating your assets. Tata Capital is your ideal loan against securities provider with simple processes and flexible repayment options. Click here to know more.
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