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Easy Way to Avail a Loan Against Securities at Lower Interest Rates

Posted April 2, 2018 by Aman Khanna to Finance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

When it comes to investments, you will find many investors build portfolios of mixed options such as deposits, bonds, mutual funds, equity shares and more.
When they face some urgent or unexpected requirement, they are unsure about whether to liquidate investments or raise funds. What’s more, they are even concerned about rebuilding their asset.

In the same context, a loan against security offered by leading banks, non-banking finance companies (NBFCs) and other financial intuitions could serve as a lucrative alternative.

Collateral or Security

Banks, NBFCs other financial institutions offer an exhaustive list of eligible securities against which they can easily offer a loan. However, a lien or collateral needs to be kept in order for the loan to be applied and availed. The value of the offered loan is a percentage of the worth of the securities, which could vary anywhere between 50% (for equity shares), and about 90% (for bank deposits).

The Process

A current account with the facility of an overdraft is initiated, and a borrowing limit is also set depending on the value of the securities and collaterals. Investors are entitled to withdraw from their accounts as per their needs, and can repay it by simply depositing the money into their current account. As a result, the process is simpler and flexible as compared to an EMI operated loan plan.

The Interest

The loan against securities interest rate is comparatively lower than that of a credit card or a personal loan because it has collateral attached to it, making it secure for lenders. The loan against securities interest rate is charged monthly, on the basis of daily outstanding balance in the overdraft’s account.

Flexibility

After the limit is approved depending on the collateral’s worth, investors are allowed to withdraw the loan amount as per their needs. It also includes ATM and internet banking facilities. Repayment is also allowed and could be made as per the availability of the cash inflows at any time.

Vital LAS Points to Note

A loan against security (LAS) is often provided only to resident investors in the provided format. One needs to get in touch with a bank or an NBFC for other products if you are an NRI, HUF or any other individual.

Always be informed to know that additional or extra charges for the maintenance of the overdraft account, stamp duty, and processing on loan agreement are relevant to loan against securities transactions.

The Bottom Line

Now that you just went through the basics of availing a loan against securities (LAS), it is easy to make the most of it in India if you are faced with an urgent need for money. Leading banks and NBFCs won’t take much time to approve your LAS application. You can also expect for the money to be credited soon! Happy loan against securities application!  

 

Alternative Financing Options: Loan Against Securities vs. Quick Cash Loans

Before pledging your equity or fixed-income securities for a loan, it’s wise to compare the terms, speed, and flexibility of other short-term credit products. While a loan against securities can offer lower interest rates and preserve your long-term investment strategy, sometimes you need a faster, more streamlined process:

  • Approval speed and documentation
    Securities-backed loans typically require account opening, collateral valuation, and KYC checks.
    Cash advances can often be funded within hours with minimal paperwork.
  • Interest rates and fees
    LAS rates tend to be in the single digits but may include processing fees, stamp duty, and maintenance charges.
    A $500 cash advance no credit check direct lender can be a lifeline when you need a small, fixed amount immediately, albeit often at higher APR.
  • Collateral and credit requirements
    LAS requires eligible shares, bonds, or deposits as collateral—ideal if you want to avoid hard credit pulls.
    For slightly larger sums, a 1000 dollar loan may be available with no credit check and direct-lender approval, freeing up your securities and preserving your buying power.

Protecting Your Portfolio: Managing Margin Calls and Market Volatility

Borrowing against securities exposes you to margin call risk—the possibility that a sudden drop in your collateral’s market value will trigger a request for additional funds or forced liquidation. To safeguard your investments:

  1. Monitor Loan-to-Value (LTV) Ratios
    Keep your LTV well below the maximum (e.g., under 70–80%) to provide a cushion against market swings.
    Use real-time dashboards or mobile alerts to track portfolio valuations daily.
  2. Set Stop-Loss Thresholds
    Predefine a minimum equity cushion (e.g., 25% above margin call level) and top up or sell partial holdings if your buffer shrinks.
    Automate alerts with your broker to notify you when your maintenance margin dips too close to the danger zone.
  3. Diversify Collateral Pools
    Spread your pledged assets across different sectors or instruments (equities, debt funds, fixed deposits).
    Avoid overconcentration in highly volatile stocks that can exacerbate margin calls during market downturns.
  4. Plan for Liquidity Needs
    Maintain a small cash reserve or unused credit line to quickly meet margin requirements without selling at a loss.
    Consider blending LAS with a modest personal loan to reduce dependency on a single funding source.

 

About Aman Khanna: Aman is working in the domain of Investment management in one of the top universities. He has published research papers and case studies in Investment marketplace. He is an avid blogger in the domain of Investment management. you can also find him on social networking platforms

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