A Simplified Understanding of Loan Against Shares And Its Offerings

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A Simplified Understanding of Loan Against Shares And Its Offerings

08 October, 2021

Finding it difficult to avail a loan due to bad credit, existing debt or unemployment? 

Well, getting a loan from banks is a tedious task. There are a number of eligibility criteria that you have to pass before you are deemed fit for a loan. If you have tried taking a loan before, you are probably already aware of the tediousness. Since this criteria is applicable for all kinds of loans, many people, especially those struggling financially, find it difficult to find funds for their dreams or goals. 

However, with changing times and digitization, various new financing options are emerging. One such option is called Loan Against Securities (LAS). Here’s all you need to know about LAS.

What Is Loan Against Securities? 

Loan Against Securities or LAS is literally what it means- you can get a loan against your existing investment portfolio.

Think of it this way- you have a dream of buying a new house or starting your own business, maybe you dream of traveling the world or buying your favorite car. You tried applying for a loan to fulfill that dream, only to be rejected again and again due to various factors.

The only thing left in your hands is a 10 year old stock portfolio investment. Selling it may seem like a bittersweet deal, but you are out of options. 

Now bring LAS into the picture. This product allows you to secure a loan by keeping your stock portfolio as collateral. It is typically offered through an overdraft facility and the interest is charged only on the amount you withdraw, and for the period you use. 

For example, if you are eligible for a loan against shares with a value of Rs. 5,00,000; but you withdrew only 1,00,000 which you deposited back in 2 months, then you are liable to pay interest only on that 1,00,000 for 2 months. 

The loan amount depends on the value of your securities. This way, you leverage your portfolio without selling it!

Benefits Of Loan Against Shares 

 There are various benefits of LAS. The process and system of availing a LAS is quite different from a normal loan process. Here are a few benefits. 

  1. Flexible repayment: Most institutions provide a flexible repayment option. You can either pay in full or in installments, depending on your policy. 
  2. Various options: LAS can be availed on shares, debentures, insurance, mutual funds, and more. 
  3. Credit line: Overdraft facility is available to you for convenience, pay only what you withdraw. 
  4. Prepayment penalty: There is no prepayment penalty. You have full control over your loan. 
  5. No credit score required: All you need to avail LAS are your DEMAT securities and basic documents like identity and address proof. Anyone who has investments is eligible for a loan. 

With digitization in the picture, availing a loan against shares has become easier than ever. At spark.loans, we provide a seamless digital experience. We are India’s first ever mobile application dedicated for LAS. 

If you are looking to make the most of your investments, then don’t hesitate to download our app from the Playstore. Get in touch with us for any queries. 



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