Things to consider before applying for a loan against shares

A loan against shares (LAS) is a type of secured loan where you pledge your shares as collateral to access quick funds without selling your investments. Instead of liquidating your portfolio during a market dip or when you need urgent liquidity, you can leverage the value of your shares to meet personal or business expenses. Once pledged, the lender marks your shares under lien and sanctions a loan based on a percentage of their market value, known as the Loan-to-Value (LTV) ratio. You continue to remain the owner of the shares and are entitled to dividends and bonuses while the loan remains active. This form of credit offers flexible withdrawal, interest-only servicing, and quick approval making it an ideal choice for those seeking short-term liquidity while staying invested in the market.

Unlike unsecured loans, a loan against shares and securities allows you to:

• Avoid liquidation of your portfolio
• Continue earning dividends
• Enjoy lower interest rates
• Access emergency funds quickly

Do you know? You can get a loan against shares of up to Rs. 5 crore by submitting just 3 documents. Sounds simple? It actually is.

But before you apply, here are a few things to consider before taking a LAS to ensure you’re making the best borrowing decision possible.

A loan against shares helps you unlock the value of your investments without selling them. It offers instant liquidity, flexible usage, and cost-efficient borrowing making it a smart choice for both investors and professionals seeking quick funds. Key advantages:

• Instant liquidity: Access funds quickly without liquidating your shares, allowing your investments to keep growing.
• Flexible usage: Use the loan amount for business expansion, emergencies, or personal needs — with no end-use restrictions.
• Quick and easy process: Enjoy a smooth, mostly digital application with minimal documentation and fast disbursal.
• Interest on used amount only: You are charged interest only on the portion you withdraw, keeping your costs in check.
• Overdraft flexibility: Withdraw, repay, and reuse funds freely within your sanctioned limit.
• Retain market gains: Stay invested and continue earning potential dividends and appreciation on your pledged shares.
• Lower interest rates: Being a secured loan, it typically offers more affordable rates than unsecured credit options.

1. Understand the eligibility criteria

The first step in securing a loan against shares and securities is ensuring you fit the eligibility criteria. While lenders may tweak their policies slightly, some requirements remain consistent across the board. The eligibility benchmarks are:

• Nationality: You must be an Indian resident.
• Age: You should be between 21 and 90 years
• Employment: Both salaried professionals and self-employed individuals can apply.
• Security value: You must pledge shares worth at least Rs. 50,000.

Since it’s a secured loan, your financial track record is not scrutinised as aggressively as it is for unsecured loans. Your pledged shares act as a buffer, giving lenders confidence in your repayment capability.

No complex paperwork. No rigid barriers. Apply now and get funds fast.

2. Check the interest rate and all applicable fees and charges

One of the most important things to consider before taking a LAS is how much it will cost you. The interest rate is obviously a major factor, but that’s not the whole picture. Make sure to review:

• Processing fees
• Foreclosure or part-prepayment charges
• Annual maintenance fees or renewal charges
• Penalties on delayed payments

Each of these can add to your total cost of borrowing. That’s why it’s crucial to compare lenders—not just on the basis of interest rate, but also on overall fee structure. Bajaj Finance Limited stands out by offering competitive interest rates and a transparent fee policy that’s easy to understand and budget for.Know more about loan against shares interest rate and processing fees

3. Loan-to-Value ratio (LTV)

The Loan-to-Value (LTV) ratio is a simple yet vital concept in the world of loan against shares. It refers to the percentage of your share value that you can borrow against. For instance, if your shares are worth Rs. 10 lakh and the 50% LTV, you can borrow up to Rs. 5 lakh.

This ratio is governed by SEBI regulations and ensures a balanced risk approach for lenders. Lenders usually offer up to 50% LTV, meaning you don’t have to sell your shares to get access to funds. You continue to enjoy ownership benefits such as dividends and capital appreciation, all while meeting your financial needs.

4. Loan amount and tenure

One of the standout features of a loan against shares is its built-in flexibility. Unlike traditional loans, where the full disbursed amount begins to accrue interest from Day 1, LAS works more like an overdraft. You’re only charged interest on the amount you use, not the entire sanctioned limit.

In addition, you get a flexible loan tenure of up to 36 months, giving you breathing space to plan your repayments. Whether you need to borrow for a few weeks or a couple of years, this structure adapts to your timeline. This is especially useful for business owners or individuals dealing with temporary liquidity issues.

Enjoy flexible borrowing with zero pressure. Apply now

5. Required document in loan against shares

While the application process for many loans can be tedious, loan against shares offers a much more streamlined experience. Most lenders, including Bajaj Finance Limited, ask for a minimal set of documents. Here’s what you’ll typically need:

• Your PAN card
• A valid address proof (such as Aadhaar, passport, or utility bill)
• Bank account details for disbursal and EMI repayment
• Your Demat account holding statement to verify the value and ownership of pledged shares

You can complete the application and verification process online in just a few steps. For urgent financial requirements, this quick turnaround time can be a major advantage.

6. Shares loan interest rate and fees

The interest rate for a loan against shares is typically lower than unsecured loans since your shares act as collateral. Rates may vary depending on the value and type of shares pledged, loan amount, and borrower profile.

Apart from interest, minimal processing fees and charges may apply, including account setup or lien marking fees. However, there are generally no hidden costs, making it a transparent and affordable borrowing option.

7. Repayment strategy and risks in loan against shares

A loan against shares is usually offered as an overdraft facility, giving you the flexibility to repay anytime within the tenure. Interest is charged only on the amount utilised, helping you manage your cash flow efficiently.

Here is the complete Information about : what are the documents required for loan against shares

Getting started is easier than you think. Here’s a step-by-step guide:

1. Check eligibility: You should be an Indian resident with listed equity shares in your name.
2. Apply online or offline: Choose your preferred mode—digital or assisted.
3. Submit documents: Basic KYC and shareholding details.
4. Share pledge setup: The lender will initiate a pledge through your demat account.
5. Loan disbursement: Once the pledge is confirmed, your loan is released—usually within a day.

Why wait for liquidity when your portfolio can fund your goals? Apply now

A loan against equity shares isn’t just a financing tool it’s a liquidity strategy that lets your investments work double time. Whether you are planning to fund your startup, cover urgent medical costs, or simply need liquidity for a short-term crunch, this option gives you flexibility without letting go of your long-term growth potential.

Own shares? You already hold the key to instant funds. Tap into your equity with a loan against shares, no selling, no stress.

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