Every earning person saves money for future expenses or to have a secure and stable life. The savings are done via a number of different schemes that sometimes generate more returns in the form of interest. This is what is expected from a regular earning person. However, many people come across certain potential mishaps and unfortunate events where one urgently needs emergency funds. The financial instruments where you are investing can be used to avail loans during situations such as these. Read on to understand why loan against financial instruments can be a wise option during the testing times.
You use your savings to invest in property, fixed deposits, gold and such similar schemes. These same investments can be put up as collateral when you take a loan. Here is a list of 5 financial instruments that you can put up against a loan:-
Taking a loan against listed securities such as equity shares is a common method to take a loan against a financial instrument. The tenure and value of the loan generally depend on the loan providers which may be banks or Non-banking Financial Company (NBFC). The value of the loan amount is usually settled at 50% of the value of shares. However, as share markets can be associated with market ups and downs, taking a loan against shares at a time when the share price is running low may lead to loss of monetary value in the future. So, it is important that you are on a constant look-out for any changes in the share price.
Taking a loan while keeping one
