₹10,000 - ₹25 Cr
Loan of up to 80% of policy value| Funding against policies under lock-in period
Overview
Loan Against Securities vs Other Loan Options_ What's the Difference
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What is a loan against shares?
In summary
A loan against shares and a gold loan are both secured borrowing options, but they use different assets as collateral. A loan against shares uses eligible securities held in a demat account, while a gold loan is secured against eligible physical gold. The choice depends on the borrower’s assets, liquidity needs, and repayment capacity.
- Collateral: LAS uses eligible shares, while a gold loan uses eligible gold.
- Loan amount: LAS generally depends on the market value and applicable LTV of the pledged shares.
- Ownership: With LAS, borrowers retain ownership of their pledged shares, subject to the lender’s terms.
- Market risk: The value of shares can fluctuate, which may affect the collateral value and borrowing limit.
- Repayment: Both options involve interest and repayment obligations, with terms varying by lender.
A loan against shares (LAS) is a secured loan where you pledge your equity shares as collateral to access funds. The lender provides a loan based on the market value of the pledged securities.
The biggest advantage is that you retain ownership of your shares and can continue to enjoy dividends, bonuses, and corporate benefits while unlocking liquidity. The securities to be pledged should be included in the lender’s approved list of securities, and the loan amount shall depend on the prevailing market value of pledged securities.
Turn your investments into liquidity without selling them. Apply for a Loan Against Shares in just a few clicks.
What is a gold loan?
A gold loan is a secured borrowing option where you pledge physical gold (jewellery or coins within permissible limits) with a lender. The loan amount is determined based on the purity and weight of the gold, and the lender typically provides a percentage of the gold’s value as a loan.
Repayment can be structured through instalments, bullet repayments, or interest-only plans. Once the loan is repaid, the pledged gold is released back to the borrower. Gold loans are popular in India due to the widespread availability of gold assets in households and the quick processing they offer.
While convenient, gold loans require physical gold as collateral, which may not be the preferred choice for individuals who want to keep their family jewellery intact or avoid storing it with a lender.
Loan against shares vs Gold loan
How to apply for Bajaj Finance loan against shares
Both options are secured loans, but they differ in terms of asset type, risk, loan-to-value ratio, and other features. The table below highlights the difference between loan against shares and gold loan at a glance:
| Feature | Loan Against Shares (LAS) | Gold loan |
|---|---|---|
| Collateral | Equity shares | Physical gold (jewellery or coins) |
| Loan-to-Value (LTV) | Up to 50% of share value | Up to 75% of gold value |
| Interest rate | Competitive, varies with lender and profile | Usually slightly higher but quick disbursement |
| Risk factor | Linked to market volatility of shares | Linked to gold price fluctuations |
| Accessibility | Requires demat holdings or securities | Requires physical gold assets |
| Flexibility | Overdraft and flexible repayment options | Limited repayment structures, lender-specific |
Prefer not to pledge your family gold? Opt for a Loan Against Shares to meet urgent liquidity needs smartly.
Key decision factors: When to choose shares vs gold
When comparing the difference between loan against shares and gold loan, the decision often depends on your financial profile, available assets, and the purpose of borrowing. Consider these factors:
- Availability of assets: If you have an active investment portfolio, pledging shares may be easier. If you own unused gold jewellery, a gold loan may be practical.
- Loan amount requirement: LAS may allow higher limits based on your securities, while gold loans are capped by gold value.
- Market conditions: Shares are influenced by stock market fluctuations; gold loans depend on prevailing gold prices.
- Urgency of funds: Gold loans are processed almost instantly. LAS may take slightly longer but offer more flexible repayment options.
Already invested in shares? Get instant liquidity with a loan against shares while keeping your portfolio intact.
LTV and interest rates: What you can expect
Features & Benefits for Bajaj Finance loan against shares
When choosing between these two secured loans, it is important to understand the loan-to-value (LTV) ratio and interest rate structure.
| Asset type | Typical LTV Ratio | Typical interest rate |
|---|---|---|
| Loan against shares | Up to 50% of approved securities | Competitive, depends on profile and lender |
| Gold loan | Up to 85% of gold’s market value | Usually higher, varies basis lender to lender |
Although gold loans offer a higher LTV, interest rates may be slightly higher than LAS. On the other hand, LAS can be more cost-effective for individuals who plan to use funds only as needed.
Conclusion
Both loan against shares and gold loans are efficient ways to unlock liquidity without liquidating assets. The difference between loan against shares and gold loan lies primarily in the type of collateral, repayment flexibility, and associated risks. If you have gold assets, a gold loan may serve short-term needs quickly. However, if you are an investor who wants to retain ownership of securities while gaining access to funds, a loan against shares could be a more strategic choice.
Secure funds without parting with your investments. Apply for a Loan Against Shares today and enjoy financial flexibility.
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Frequently asked questions
General
What is the difference between loan against shares and gold loan?
A loan against shares lets you pledge your securities to access funds while retaining ownership. A gold loan requires pledging physical gold, which remains with the lender until repayment. Both differ in collateral type, risk, and flexibility.
What LTV can I expect on gold vs shares?
For gold loans, lenders usually offer up to 85% of the gold’s value. For loans against shares, the LTV ratio is typically up to 50%, depending on the securities pledged and market conditions.
How quickly can I get funds via gold loan vs loan against shares?
Gold loans are often disbursed almost instantly since physical assets can be quickly valued. Loans against shares may take slightly longer due to security verification but still provide fast processing, especially when you have demat holdings or approved securities.
Are gold loans safer than loan against shares?
Both are secured loans but carry different risks. Gold loans depend on gold price stability, generally less volatile. Loans against shares depend on stock market movements, which can be riskier but offer structured facilities and portfolio ownership benefits.
How do I choose between gold and shares as collateral?
Choose based on available assets and your priorities. If preserving gold jewellery matters, pledge shares. If you lack investments but hold gold, a gold loan works. Consider LTV, repayment flexibility, and market risks before deciding.
Disclaimer
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