Loan Against Your Stocks in a Bull Market

Is now a good time to avail loans against your stocks?

Photo by Joshua Mayo
  1. There is no requirement of additional security apart from the shares you pledge. Plus, there is no requirement for a guarantor to avail of this loan.
  2. Your investments in shares continue to grow while it is pledged with the lender. In addition, you get all the benefits of owning the shares, such as dividends and bonuses that are declared over time.
  3. Each lender has a list of shares that they accept as collateral. It ensures the lender does not have to face losses during market dips.
  4. The lender usually assesses the value of the pledged shares on a weekly basis.
  5. The maximum loan you can avail of is up to 50% of the value of shares held in the Demat Account.
  6. The loan is typically offered as an overdraft facility. So you pay interest only for the amount you utilize on a pro-rata basis.
  7. The maximum loan tenure is generally 36 months. However, it is advisable to not extend the loan for longer than several months.
  8. There are typically no prepayment charges for Loan Against Shares. In the case of default in the loan repayment, the lender holds the right to liquidate your shares fully or partially to recover the due amount.
  • The shares must be in the name of you, the individual. Lenders do not consider shares in the name of HUFs, corporations, and minors.
  • You must have valid identity proof, address proof, income proof, and DP statement.
  • You should not be a Director or Promotor of a company whose shares you wish to pledge.
Photo by Jason Briscoe
  1. Sign-up by verifying your mobile number and email address.
  2. Share your personal details, such as name, age, address, contact details, details of identity and address proofs, etc.
  3. Read the list of shares accepted as collateral.
  4. Select the shares from your Demat account which you wish to pledge.
  5. Read all the Terms and Conditions and pledge the shares digitally.
  6. You will receive a ready-to-use loan amount within a few minutes.

Dhanlap launched by Ark Neo Finance is a digital LPaaS (Loan Platform as a Service) that caters to retail investors.