The financial services space has evolved within the past decade. Today, customers have plenty of options to choose from when it comes to borrowing funds. One can opt for various types of secured and unsecured loan products. Loan against securities is one such credit product to borrow funds. It offers an innovative way to leverage securities for borrowing money. Read on to learn what is a loan against securities and how it works.
What is a Loan Against Securities?
A loan against securities is a type of credit instrument that allows people to pledge their financial investments as collateral for the loan. For example, one can pledge financial investments like mutual funds, shares, life insurance policies, etc., to borrow money. It is a relatively new credit tool for borrowing funds. Traditional credit instruments only offered loans on assets such as gold, real estate property, and vehicles.
Liquidating financial investments to fund urgent financial obligations is not the right approach. You might lose a lot of money. However, with a loan against securities, you can leverage your financial investments to avail of funds. The amount borrowed will largely depend on the value of your investment.
Loan Against Securities Eligibility
The eligibility for a loan against securities can vary, depending on your lender’s policies. However, many new-age NBFCs like Fullerton India have a flexible approach. Let’s take a quick look into the loan against securities eligibility criteria.
· The loan applicant must be over 21 years old with a stable income source
· The loan applicant should own a Demat, savings, and current accounts
· The applicant should have a CIBIL score above 750
· The minimum value of financial investments owned should be INR 10 lakhs
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