Why Opt For Loans Against Shares-8l9840

Loans The Sensex fell by 20.64 per cent since its peak at the closing on January 29, 2015, says an article published by the Business Standard on February 15, 2016. Given the downturn, the experts are advising investors with a diversified portfolio and a long term horizon to not exit the market at this juncture. Therefore, if you are in need of money, selling your shares at the current market rate would be imprudent. Instead, if you have a wide portfolio, you could benefit from opting for a loan against shares. This will not only help you to meet the pressing need for capital, it will also help you to retain your investments for long-term gains. How to Optimize Your Investments in Your Time of Need? Loan against shares, as the term suggests, entails the pledging of certain high value shares in order to obtain a portion of its value as loan. When you approach a financial institution for such a loan, they will first analyze your credit worthiness along with the valuation of the shares. If you are found eligible, you will be able to draw a maximum loan of the margin that is allowed by the institution. RBI prescribes a minimum margin of 50 per cent of the value of the shares pledged, but some institutions may offer more. Once it has been approved, the institution creates a current account from which the borrower can withdraw the money. Why Opt for Loan Against Shares? When borrowing money against ones investments, one pays interest only on the amount withdrawn from the account and for the duration that the funds are utilized. The interest rates are usually lower than that of personal loans. Such a loan requires no personal guarantor unlike other forms of loans that entail extensive paperwork. Moreover, it allows you to retain the dividends from the shares that have been pledged while at the same time offering instant liquidity. The proceeds from such a loan can be used for personal or business needs, the only restriction being the funds should not be reinvested in stocks. Tips for Those Considering LAS Credit Institutions keep revising the list of shares against which loans are given. This is done at regular intervals to ensure stability and liquidity of the shares in question. If you are looking to opt for such a loan, you should check the lists available with the lending institutions and have your shares valued by a professional. Dematerialized shares are preferred over physical shares, although some institutions will allow the latter at a higher interest rate. It is best to convert one’s shares to dematerialized form before seeking to pledge them. About the Author: 相关的主题文章: