Loan Against Securities Interest Rate

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3 min
06-August-2025

In the world of finance, loans against securities have become a popular option for individuals seeking liquidity without selling their investment assets. This article explores the nuances of the loan against securities rate of interest alongside other crucial aspects of this financial product.

Introduction to loan against securities interest rates

A loan against securities (LAS) is a loan where borrowers pledge their investment assets, such as stocks, bonds, or mutual funds, as collateral. It provides a way to access funds without liquidating investments, which might be particularly beneficial in times of market volatility. The interest rate on loan against securities is a critical factor that determines the cost of borrowing and the overall financial viability of this option.

Current interest rate on loan against securities

The interest rate for a loan against securities typically starts from 8-15% per annum, making it one of the most cost-effective credit options for those with investments. Bajaj Finance offers flexible interest rate structures, including both fixed and floating rates, depending on the type of security pledged (shares, mutual funds, insurance policies, etc.) and the loan amount.

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

Bonds

8-15% p.a.

Floating
Loan Against Shares
Loan Against Mutual Funds

Features and benefits of a loan against securities

Features:

  1. Swift access to funds: Loans against securities provide a rapid and straightforward method to obtain capital, bypassing the extended approval procedures linked with conventional loans.
  2. Competitive interest rates: These loans generally feature lower interest rates compared to unsecured loans, thanks to the backing of liquid collateral.
  3. Portfolio retention: Borrowers can maintain their investment portfolio and continue to reap the benefits of potential appreciation while using their securities as collateral.

Benefits:

  • Expedited funding: The process of securing a loan against securities is considerably faster and more convenient than traditional loan applications, allowing for quick access to necessary funds.
  • Cost-effective borrowing: The presence of collateral means lenders can offer more attractive interest rates, making this a more affordable borrowing option.
  • Ongoing investment growth: Even while being used as collateral, the borrower's investment portfolio remains active, potentially increasing in value and offering continued financial growth.

Processing fees and charges applicable on loans against securities

Loan against securities charges

Description

Processing fees

Lenders typically charge a one-time processing fee, which can vary basis the loan amount.

Prepayment charges

Some lenders might impose charges for prepayment or early closure of the loan.

Penal charges

In case of delayed payments, lenders may levy penal interest in addition to the regular interest rate.

Pledge creation charges

There could be fees associated with creating a pledge on the securities.

Annual maintenance charges

Some lenders might charge an annual fee to maintain the loan account.

 

Step-by-step guide to applying for a loan against securities

  • Assess your needs: Determine the amount you need to borrow and the securities you wish to pledge.
  • Compare lenders: Research different lenders to compare interest rates, processing fees, and other charges.
  • Check the loan-to-value ratio: Understand the loan-to-value (LTV) ratio offered by the lender, which indicates the maximum loan amount you can get against your securities.
  • Initiate the application process: Contact the lender to start the application process, which may involve an online application or a visit to the branch.
  • Complete the documentation: Provide all required documents and complete any additional formalities as per the lender's requirements.
  • Loan sanction and disbursal: Once the loan is approved, the lender will sanction the loan amount and disburse the funds.

Factors that affect LAS interest rates

The interest rate on a Loan Against Securities (LAS) can vary based on several key factors:

  • Type of security pledged: Loans against listed shares or mutual funds often attract lower interest rates than those against insurance policies or bonds.
  • Loan amount: Higher loan amounts may qualify for marginally better rates, depending on eligibility and creditworthiness.
  • Borrower profile: Your credit score, repayment history, and overall financial profile impact the interest offered.
  • Loan tenure: Shorter tenures may come with reduced interest rates, while longer terms may carry slightly higher rates.

Understanding these variables can help you negotiate more favourable terms on your LAS.

How is interest calculated on loan against securities?

Interest on a Loan Against Securities is usually calculated on a daily reducing balance, meaning you pay interest only on the amount you utilise and for the number of days it's used. Here's how it works:

  • Daily usage basis: Interest is charged only for the number of days the funds are withdrawn from your loan limit.
  • Charges: In addition to interest, nominal processing fees and annual maintenance charges may apply, depending on the lender.

This structure ensures that your borrowing cost stays efficient and transparent.

Why choose Bajaj Finance for LAS?

Bajaj Finance offers a competitive and reliable LAS experience, backed by features tailored to investor needs:

  • Attractive interest rates starting from just 8-15% p.a.
  • High-value loans of up to Rs. 1000 crore
  • Flexible tenure and part-repayment options
  • 100% digital journey, from application to disbursal
  • No need to sell your securities—retain market gains while accessing liquidity

Conclusion

The loan against securities interest rate is a pivotal factor that influences the cost-effectiveness of this borrowing option. By understanding the various charges and the application process, borrowers can make informed decisions and leverage their investment assets efficiently. It's advisable to compare different lenders and negotiate terms to secure the best possible deal.

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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 9% to 12%, 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 can range from 0.5% to 2% 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.

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