Life is very unpredictable and often throws unexpected – sometimes unpleasant surprises our way. Some of these might land us in a soup, at least financially. Many of us might even have savings but might not want to tear down our painstakingly constructed investment portfolios over some temporary issue.
Fortunately, credit has come a long way, and loans are far easier to obtain. That said, even in today’s borrower-friendly credit environment, it is essential for the borrower to offer some collateral against which a Banks / NBFCs will extend a loan. But what if you have no collateral? You could opt for an unsecured loan, but that means substantially higher rates of interest. That’s where a loan against shares can come to your rescue.
What is a Loan Against Shares
A loan against shares is granted against the collateral of your shares. That means that although you might not have a house to offer as collateral against your loan, you can still get a loan if you have got shares of a public listed company.
When a borrower opts for a loan against shares, he is pledging his shares or effectively offering his shares as an assurance that he will make good on his debts. The borrower can also pledge bonds and mutual fund investments.
This is a very efficient method of making the most of your stock market investments while also gaining access to capital that you might need for your personal, educational, or business requirements.
It is up to the Banks / NBFCs to decide which shares are eligible for a loan against shares and what percentage of the current stock market value of these shares will be extended to you in the form of credit.
OneNDF has been in the business of bridging borrowers and Banks / NBFCs since 2013; we have spent almost a decade perfecting the art of the most optimal borrower-lender pairing. The OneNDF advantage offers you the following.
Proprietary tech creates perfect matches.
Based on the needs that you feed into the system, you are matched with a few Banks / NBFCs who can offer you a loan based on your capital requirements, loan tenure, loan type, preferred interest rate, EMI size, etc.
Negotiate via Video Calling
Our platform has an inbuilt chatbot and video calling feature that allows you to have vital face to face conversations with verified Banks / NBFCs located anywhere in the country. Get your questions answered, get clarifications or, use your skills to negotiate an even better deal. Talk about fees and charges and get all the information you need. OneNDF empowers you to get the best loan against shares for your needs.
End to end support
OneNDF goes far beyond simply linking borrowers and Banks / NBFCs. We are with you every step of the way, through loan disbursal and up until you pay your last EMI. Route all your queries and support requirements via OneNDF – we are here to assist both you and your Banks / NBFCs every step of the way.
Fees and charges for loan against shares
At OneNDF, we believe that transparency comes into play long before our partnership with you takes off. As a display of our transparent dealing, here is a quick guide on the fees and charges you might encounter in your borrowing and repayment process:
The amount of Processing Fee is different for each Bank / NBFC. You can connect with the OneNDF Loan Pundit to know more about the processing fee or you can ask the Bank / NBFC directly using our platform.
This is also paid to your lending Bank or NBFC, and it varies between 2% and 5%. At OneNDF, we can help you negotiate the Prepayment charges with your Bank / NBFC, though majority of the financial institutions do not charge prepayment fee on Loan against Shares.
Borrowers can enjoy many benefits from a Loan Against Shares.
Many investors feel genuine heartache, anxiety and sadness when they need to liquidate their portfolio of securities (or even a portion of it) to obtain a loan to deal with some emergency that life has thrown at them. The most common sentiments are dread and anxiousness associated with a fear that they will never bring able to build back their portfolio to the same extent ever again. Fortunately, with a loan against shares, the borrower can very conveniently pledge securities from their portfolio to obtain a personal loan. The borrower can retain their securities and still receive the capital required to deal with the emergency through a loan against shares.
The most compelling reason for most borrowers to choose loans against shares is the low rate of interest associated with them. A loan against shares is categorised as a secured loan. This means that the borrower enjoys substantially lower interest rates than secured loans, which could levy 2% to 6% higher interest than their secured counterparts. Additionally, you do not pay interest from the word go, as you do with other types of loans. You pay interest only on the amount withdrawn and for the tenure that you borrow the capital for.
If your securities reach their target price while still pledged under your loan against shares, you can still go ahead and sell them. From the amount you receive upon the sale of the shares, the portion owed to the Banks / NBFCs is paid off, while the remainder is returned to you.
For most types of loans, you need to submit original documents related to collateral to your Banks / NBFCs. However, with a loan against shares, you retain the shares in your Demat account. Only a lien is marked to the Banks / NBFCs that ensures that the portion owed to them is paid if you sell the pledged securities.
Since you are supplying your shares as collateral, you can very easily obtain a loan against shares without the Banks / NBFCs verifying your credit score. This is a huge convenience, especially if you are a first-time borrower (or, for some reason, happen to have a poor credit score).
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