There could be various occasions when one requires more funds than one has. The funds can be used to start a business, pay for medical expenses, buy a home, fund your child’s wedding, and so on. To meet these monetary requirements, one can either dip into their life savings or take a loan that can be repaid over a tenure. Loans are an easy way to facilitate funds whenever required and then can be repaid over time with additional interest over the principal.
Even when it comes to loans, there are various financiers and financial tools that offer different deals at various interest rates. However, there is one type of loan that gives the dual advantage of low-interest rates and simple eligibility criteria. A loan against shares is one such option that allows you to leverage your investments in shares to meet your financial requirements. Here you need not liquidate your shares and continue to earn dividends while availing a loan against up to 50% of the value of your shares (subject to terms and conditions of each lender and as per the RBI Master direction issued from time to time). With Bajaj Finance Limited, you can get a loan against shares of up to Rs. 5 crores by submitting just 3 documents. However, before making a decision there are a few things to consider while applying for a loan against shares to ensure a smooth borrowing experience.
Few things to consider while applying for a loan against shares
1. Eligibility criteria
To apply for a loan against shares, there are certain eligibility criteria that one needs to fit into. These loan against shares eligibility criteria might vary from lender to lender, however, there are some common factors. The loan against shares eligibility for Bajaj Finance Limited are stated below:
- Nationality: All Indian residents are eligible to apply for a loan against shares
- Age: All borrowers must be between the age of 18 to 90 years
- Employment: Self-employed and salaried individuals can easily apply for a loan against shares
- Security value: A minimal security value of Rs. 50,000 is required to get a loan against shares. These loans usually have more relaxed eligibility criteria because they are secured in nature.
2. Interest rates and charges
The applicable interest rate is one of the primary factors to consider when choosing a lender. Interest rates and charges for loans against shares vary from lender to lender. Borrowers should ideally carefully compare the rates and charges offered by different lenders and choose the lender that offers the lowest interest rates. Bajaj Finance Limited offers a Loan Against Shares (LAS) at attractive interest rates with minimal processing fees and prepayment charges.
3. Loan to Value (LTV) Ratio
The loan-to-value ratio essentially means the percentage of the loan amount availed of against the value of the shares. With Bajaj Finance Limited, borrowers can get up to 50% loan-to-value.
4. Loan amount and tenure
Loan against shares offers flexibility for borrowers because they need to pay interest only on the utilised amount of the loan. With Bajaj Finance Limited borrowers can easily repay their loan amounts along with accrued interest during their loan tenure of up to 36-months.
5. Documents required
Borrowers should be aware of the processing time and documents required to get a loan against shares. Usually, for LAS the documents required are minimal.
Armed with this information you can now get a loan against shares easily to finance your requirements. However, it is wise to carefully consider the eligibility criteria, interest rates, repayment terms, and charges involved before applying for the loan. Proper due diligence, understanding the lender's policies, and evaluating the tax implications, are crucial steps to ensure a smooth borrowing experience.
Bajaj Finance Limited offers attractive loan against shares options with attractive interest rates, minimal processing and repayment charges, and flexible tenures, making it a reliable choice for borrowers.
