Loan Against Securities Interest Rate

Checkout interest rates, processing fees and other charges before applying for a loan online.
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3 min
12-December-2025 

Ever needed quick funds but did not want to sell your investments? That’s exactly where a loan against securities can step in. Instead of liquidating your shares, bonds, or mutual funds, you can pledge them as collateral and borrow money all while your investments continue to grow in the background. One of the biggest things to understand before taking this option is the loan against securities rate of interest. It directly affects how affordable your loan will be. Let’s explore how it works, what impacts it, and why it might be the smarter choice for short-term liquidity.

Why borrow hard when you can borrow smart? Use your investments to unlock instant cash. Explore now

What is a Loan Against Securities (LAS) and how interest rates work?

A Loan Against Securities (LAS) allows you to unlock the value of your existing investments without selling them. By pledging financial assets such as shares, mutual funds, bonds, or insurance policies, you can access immediate liquidity while continuing to enjoy market-linked growth.

The lender holds your securities as collateral and extends a credit limit based on their current market value. The sanctioned amount usually depends on the Loan-to-Value (LTV) ratio, which can range between 50% to 90% of the asset’s worth.

Interest rates on LAS work differently from traditional loans. They are typically charged only on the amount you actually withdraw, not the total sanctioned limit. The rates may vary depending on the type of security pledged, the borrower’s risk profile, and the lender’s internal policies. Additionally, since LAS is a secured loan, the interest rates are usually lower than unsecured loans like personal loans or credit cards, making it an attractive and cost-effective funding option.

Quick funds. Lower cost. No break in growth. Apply now

Current interest rate on loan against securities

The loan against securities rate of interest usually ranges between 8% and 15% per annum. The exact rate depends on:

  • The type of security pledged
  • The loan amount you apply for
  • Whether the rate is fixed or floating

Here is a quick look:

Type of security pledged

Interest rate (starting from)

Rate type

Listed shares

8–15% p.a.

Floating

Mutual funds (Equity/Debt)

8–15% p.a.

Floating

ULIPs / Endowment policies

8–24% p.a.

Fixed/Floating


What is loan against securities (LAS)?

A loan against securities (LAS) is a secured credit facility that allows you to borrow money by pledging your financial investments instead of liquidating them. These securities may include shares, mutual funds, bonds, or specific approved instruments. The lender provides a loan based on a percentage of the market value of the pledged holdings, allowing you to unlock liquidity while your portfolio continues to remain invested and potentially grow. LAS is often used for urgent working capital, business expansion, personal expenses, or short-term cash flow gaps, making it a flexible financing option for individuals with strong investment portfolios.

How interest rates work?

Interest rates on LAS depend on several factors, primarily the type and quality of the securities pledged, the lender’s internal risk assessment, and prevailing market conditions. Since LAS is a secured loan, the rates are typically lower than unsecured credit options. The interest is charged only on the amount you utilise out of the sanctioned limit, giving you better control over borrowing costs. Rates may be linked to benchmark indices or remain fixed, depending on the lender’s policy. Additionally, fluctuations in the value of the pledged securities may lead to re-margining, which can also influence your effective borrowing cost.

Loan Against Shares
Loan Against Mutual Funds

Features and benefits of a loan against securities

Here are the features and benefits of taking loan against securities:

Features

  • Quick access: Get funds faster than traditional loans.
  • Affordable rates: Pay less interest compared to unsecured borrowing.
  • Portfolio retention: Continue to enjoy market growth while using your securities as collateral.

Benefits

  • Fast approvals: Access funds when you really need them.
  • Cost-effective borrowing: Lower overall repayment burden.
  • Ongoing growth: Your investments remain active, potentially increasing in value.

Why liquidate? Borrow against your securities and keep your investments working. Get started

Processing fees and charges you should know

While interest is the biggest cost, you should also account for:

  • Processing fees: One-time fee depending on loan amount
  • Prepayment charges: May apply if you close early
  • Penal charges: For late repayments
  • Pledge creation charges: For creating security against your assets
  • Annual maintenance charges: For maintaining the loan account

Step-by-step guide to applying for LAS

Getting started is simple:

Step 1: Click on ‘Apply’ and start your application.

Step 2: Enter your basic details such as name, PAN, and date of birth.

Step 3: Verify your email address and mobile number for security.

Step 4: Select the securities (shares, mutual funds, bonds, or policies) you want to pledge.

Step 5: We assess your portfolio and share a customised loan offer.

Step 6: Complete quick KYC verification and register an e-mandate for repayments.

Step 7: Accept the loan terms and pledge your securities.

Step 8: Once approved, the sanctioned loan amount is transferred directly to your bank account.

Eligibility and documents required for LAS

To apply for a Loan Against Securities (LAS), borrowers must meet basic financial and documentation criteria set by the lender. Eligibility is usually determined by the applicant’s age, ownership of approved securities, and overall financial profile. Since LAS is a secured facility, lenders primarily assess the quality, stability, and market value of the securities being pledged rather than solely relying on income-based metrics. Below are the typical requirements:

Eligibility criteria

  • Age requirement: Applicants generally must be between 21 and 65 years old at the time of application.
  • Ownership of approved securities: Only securities listed under the lender’s approved list, such as select shares, mutual funds, bonds, or other eligible instruments qualify as collateral.
  • KYC compliance: Individuals must have valid KYC documents as per regulatory norms.
  • Resident status: Most lenders allow applications from resident individuals, NRIs, and entities such as HUFs, partnerships, or private limited companies, depending on internal policies.
  • Clean financial track record: A satisfactory credit profile may be required even though the loan is secured.

Documents required

  • Identity proof: PAN card, Aadhaar card, passport, or voter ID.
  • PAN card: Mandatory for financial transactions involving securities.
  • Demat statement / holding statement: To confirm ownership and valuation of pledged securities.

Factors that affect the interest rate on loan against securities

Several factors play a role in what interest rate you get:

  • Type of security pledged – shares and mutual funds generally mean lower rates, insurance policies may carry higher rates
  • Loan amount – higher amounts can sometimes fetch better rates
  • Borrower profile – your credit history and repayment record count
  • Loan tenure – shorter durations may come with reduced rates

How is interest calculated on LAS?

The good news is interest is usually calculated on a daily reducing balance. This means you only pay interest for the actual amount you use and for the days you use it.

For example:

  • If you draw only part of your approved limit, you pay interest just on that part.
  • Withdraw later? Interest is charged only from that date.

This keeps borrowing efficient and transparent.

Pay only for what you use that is the smart way to borrow. Apply now

When is a loan against securities the right choice?

  • Emergencies like medical bills
  • Quick travel or education expenses
  • Business cash flow gaps
  • Short-term liquidity without selling assets

Tips for managing your LAS wisely

  • Choose a tenure that balances EMIs and interest cost
  • Set up auto-debit for repayment to avoid penalties
  • Keep reviewing your investment portfolio as it remains collateral

Conclusion

A loan against securities gives you quick liquidity without disturbing your savings or selling your assets. With interest rates starting from 8% p.a., minimal paperwork, and quick approvals, it is one of the most cost-effective ways to borrow. By understanding the loan against securities rate of interest, charges, and factors that affect your rate, you can make informed decisions and borrow smartly.

Your investments can support today while still building tomorrow. Apply for a loan against securities today!

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Frequently asked questions

What is the interest rate of a loan against security?

The interest rate on a loan against securities typically ranges from 8% to 12% per annum, varying based on the lender's policies, the borrower's credit profile, and market conditions.

How to get a loan against securities at lower interest rates?
To secure lower interest rates, maintain a good credit score, negotiate with the lender, and compare rates from different financial institutions.
How much processing fee is charged on a loan against securities?

The processing fee for a loan against securities is up to 4.72% of the loan amount, depending on the lender's policies.

Why are interest rates lower for loans against securities compared to personal loans?

Loans against securities are secured by collateral, reducing the lender's risk. This security allows lenders to offer lower interest rates compared to unsecured personal loans, which lack such collateral and therefore carry higher risk.

Are the interest rates on loan against securities fixed or variable?

The interest rates on a loan against securities can be either fixed or variable, depending on the lender’s policy and the type of security pledged. It’s important to check the specific terms with your lender before availing the loan.

How does a loan against securities compare to other loan options?

A loan against securities is typically more cost-effective than personal or credit card loans, as it is secured and comes with lower interest rates. It allows you to access funds without liquidating your investments, offers flexible repayment options, and is ideal for short-term liquidity needs.

Is interest charged on full loan limit or only on amount withdrawn?

Interest is charged only on the amount you actually withdraw from the sanctioned limit, not on the entire approved limit. This makes LAS a cost-efficient option because you pay interest solely on utilised funds.

What factors influence the interest rate on a loan against shares?

Interest rates depend on the type and quality of shares pledged, market volatility, borrower profile, lender risk assessment, and overall market conditions. Highly stable, liquid securities generally attract more favourable rates.

Can I get a loan against mutual funds or only equity shares?

You can typically pledge both equity and debt mutual funds, depending on the lender’s approved list. Many lenders accept a mix of securities, not just equity shares, making LAS flexible for diversified portfolios.

What fees apart from interest will I have to pay?

Apart from interest, you may be charged processing fees, documentation charges, pledge creation fees, renewal or maintenance fees, and any applicable regulatory or transaction costs based on the lender’s policy.

How is LTV calculated and how does it affect interest & loan amount?

LTV is calculated as a percentage of the current market value of your securities. Higher-value, stable securities fetch a higher loan amount. LTV indirectly affects interest by determining risk lower LTV could mean better rates.

Can I choose interest-only repayment or do I have to pay EMI?

Most LAS facilities allow interest-only servicing with principal repayment at the end of the tenure. Some lenders may also offer EMI-based repayment options, depending on product structure and borrower preference.

What happens if the pledged security value drops below a threshold?

If security value falls, the lender may issue a margin call asking you to add more collateral or repay a portion of the loan. Failure to comply may lead to liquidation of pledged holdings.

Are dividends still credited to me when shares are pledged as collateral?

Yes, dividends and corporate benefits typically continue to accrue to you as the shareholder. Pledging only transfers rights related to collateral, not ownership, unless the lender invokes the pledge.

What documents are needed to apply for a loan against securities?

Common documents include identity proof, address proof, PAN, bank statements, photographs, and Demat or mutual fund statements showing your holdings. Entities may require additional business documents.

Is prepayment or foreclosure allowed, and are there charges?

Most lenders allow part-payment or full foreclosure of the LAS facility. Some may levy nominal charges, while others offer zero-fee prepayment depending on product policy.

How soon will funds be disbursed after pledging shares?

Disbursement is usually quick—often within a few hours to one working day after pledge creation and verification. Timelines may vary based on security type and operational processes.

Can NRIs avail loan against securities?

Yes, NRIs can often apply for LAS subject to lender policies and regulatory conditions. Securities must typically be held in an approved NRO/NRE Demat account, and additional documentation may be required.

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