An urgent need for finance is sure to catch you off-guard but securing funds during such a situation doesn’t have to be a harrowing experience. If you don’t have the savings there are a few ways in which you can avail the necessary amount. One of the best ways of doing so is using a loan against securities. This puts your investment in mutual funds, shares, bonds and other securities to good use.
Here’s a look at some situations when it makes sense to take a loan against securities.
When your needs are urgent and you are expecting a payout in the near future
Funding urgent needs are made easy with this loan. If you need to cater to urgent home repairs, for instance, but can’t wait 4 months for your bonus, you can use this loan to get the job done. Since you will get your bonus in the near future, you’ll be able to repay it with ease. This is an important point to consider because a loan against securities has a tenor of up to 12 months. So you can use it to fulfil short-term needs but you should have an influx of funds in the near future to be able to repay it on time as well.
When your interest repayments are lower than your investment returns
Since a loan against securities is a secured loan, it has a low rate of interest if you choose the right lender. Besides, for the time that it is pledged as collateral, it continues to earn interest, bonus and dividends. This means that if the interest you earn from your investment is higher than the rate of interest you have to pay on your loan, it is a beneficial situation for you to be in. Not only will you have access to the funds you need, but you’ll also be able to recover the cost of taking the loan in due course of time.
When you may be able to repay the loan earlier than its tenor
If you have multiple sources of income or are a businessman who receives an influx of cash every quarter, perhaps, you know that you’ll be able to repay the loan in full once your payments come through. In such a scenario, availing a loan against securities is a safe and smart move as a loan against securities interest rate is low. More importantly, if you take it from the right lender you’ll be able to repay it flexible too.
For example, Bajaj Finserv’s Loan Against Securities gives you access to funds up to Rs.10 crore with a tenor of a year. During this time you can make pre-payments and foreclose the loan at no extra charge. In addition, you can use funds in the form of a Flexi Loan. This facility allows you to access parts of your total sanction as per your needs and you only have to pay interest on what you use. Moreover, you can pay interest-only EMIs through the tenor and repay the principal at the end. If your income is not monthly but is quarterly, bi-annual or annual, this allows you to manage your cash flow better.
When you qualify for the loan on a pre-approved offer
With a good credit score, credit history, and a steady income you can also qualify for the loan against securities with many lenders like Bajaj Finserv on a pre-approved basis. These offers simplify the application process for you allowing you a chance to get access to the funds quickly and more easily.