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March 2020
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Individuals invest or save money with the intent to grow their funds over time and to fulfill their goals. In case of any unplanned expense that can arise or due to lowered earnings, the investment vehicle is unable to generate the required funds. A loan in such situations can be a feasible option to cover all costs. There are several alternatives worth considering and one among them is a loan against security. Loans against securities are offered by banks and Non-Banking Financial Companies (NBFCs) as a viable alternative to liquidating any security owned for the fulfillment of a financial requirement. Read on to find out about the key features of this debt option:
Type of Security The chosen lending institution has a list of permissible securities against which the loan will be granted. Every institution has its own list as per the policies and lending terms. The value of the loan to be sanctioned is a fraction of the value of the security to be collateralized. This could be anything between 50% to 90% depending on the nature of the security. Options like equity are at the lower end of this range and bank deposits at the higher end. Procedure Involved The applicant receives an overdraft facility on the current account, with the limit set as per the worth of the security. Funds are to be withdrawn based on the requirements, and deposits are to be made into the account for repayment. Being secured in nature, in addition to the ease of availing this loan option, the applicant can also look forward to lower costs of borrowing. Read More :- Get The Easy Way to Avail a Loan Against Securities at Lower Interest Rates
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