6 Things You Must Know About Loan Against Shares

Financial needs come unannounced most of the time. Of course, taking a loan against shares is just one of the options, but why should you opt for it? 

They are cheaper and more beneficial than personal loans and credit card debts. Loan against shares interest rates are lower, and processing is quick. The repayment schedule is flexible too. Remember the following points before you take a loan against your shares.  

1. Banks offer loans against shares according to their pre-approved list of shares. This list varies from bank to bank, which usually consists of most of the top 1000 shares. It never hurts to know your possibilities right. 

2. Loans are offered both in the form of a term loan and an overdraft. It is important to weigh the pros and cons of each method as it suits your financial need. Loan against shares’ interest rates will vary depending on the form you choose. 

3. It's vital to note that the loan amount will not exceed 50% of the value of the shares at the current market price.

4. You can't pledge your shares if they are not in the Demat form. Convert them into Demat form to go through a hassle-free process of securing a loan against your Demat shares. 

5. A lien is a creditor's legal right to sell your shares if you fail to meet the terms of the loan arrangement. It is important to know that a lien wouldn't allow your shares unless the lien is removed on the loan repayment.

6. If you are worried about your credit score, it helps to know that eligibility for such loans is not dependent on the applicant's credit score. 

Must Read: What is Loan Against Securities? Here’s a Guide to Avail it