Things to consider before applying for a loan against shares

To ensure a smooth borrowing experience consider the following things before applying for a loan against shares.
Pledge your shares to avail funds!
3 mins
1 August 2023

We have all been there. Whether it's a sudden medical bill, a new business opportunity, or your child's upcoming wedding sometimes you need funds that your savings alone can't cover. At this point, most people dip into their savings or look for unsecured loans. But here’s a smarter alternative: a Loan Against Shares (LAS). It’s one of the few borrowing options that lets you keep your investments intact and still access liquidity when you need it most.

What makes it stand out?

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.

Things to consider before taking a loan against shares

A loan against shares is one of the most efficient ways to raise quick funds without parting ways with your investments. Whether you’re facing a temporary cash crunch or need to fund an emergency, this facility lets you leverage your existing securities without selling them.

But before you go ahead, it’s important to understand what you’re signing up for. From eligibility to fees and documentation, here's everything you need to know to make a smart and confident borrowing decision.

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 18 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.

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.

Understand the Loan-to-Value (LTV) ratio

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 LTV is 50%, you can borrow up to Rs. 5 lakh.

This ratio is governed by SEBI regulations and ensures a balanced risk approach for lenders. Bajaj Finance Limited offers 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.

Explore loan amount and tenure flexibility

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

Know what documents are required

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.

Conclusion

Choosing a loan against shares is a smart move when you need funds but don’t want to disturb your long-term investments. Whether it's for a medical emergency, business opportunity, or sudden expense, this option ensures you get access to emergency funds while retaining ownership of your portfolio. However, like any financial product, it’s crucial to assess every angle eligibility, interest rates, fees and charges, loan tenure, and documentation before you hit ‘apply’. With a clear understanding and the right lender, a LAS can become your go-to financial tool for managing short-term liquidity needs without compromising your future goals.

Turn your shares into ready capital without selling a single unit. Apply for a loan against shares today

Frequently asked questions

What is the maximum loan I can get against my shares?

The loan amount you can avail depends on the Loan-to-Value (LTV) ratio and the total market value of your pledged shares. Bajaj Finance Limited offers up to 50% of the share value as a loan. For example, if your eligible shares are valued at Rs. 5 lakh, you can avail up to Rs. 2.5 lakh as a loan.

Will I still earn dividends on the shares I pledge?

Yes. Even though your shares are pledged, you retain ownership of them. This means you will continue to earn dividends, bonuses, and other corporate benefits during the loan tenure, as long as they are credited directly to your Demat account.

Can I prepay or close my loan early? Are there any charges?

Yes, you can prepay or foreclose your Loan Against Shares at any time. Bajaj Finance Limited offers this flexibility with minimal or no prepayment charges, making it a convenient option for short-term liquidity needs.

How quickly can I get funds after applying for a Loan Against Shares?

If all documents are in order, and the pledged shares are from an approved list, Bajaj Finance Limited can process and disburse your loan within 24 to 48 hours. The process is fully digital for faster turnaround.

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