At the beginning of our twenties, we begin to gain financial independence and begin accumulating assets. The term "investment" conjures up images of high returns and profit, but there is another less-known aspect of holding assets: loans. You can get a loan against an asset if you have a financial emergency or a life emergency.
Fixed Deposit Overdraft
Taking out a fixed deposit overdraft is another option for borrowing money. The term "fixed deposit" can also refer to a type of investment. Banks typically charge early withdrawal penalties for breaking an FD prematurely, but you can take out a loan against it and continue to earn interest while your bank FD is still in the deposit period. With an overdraft facility, most lenders allow you to borrow money from your fixed deposit account and only pay interest on the amount you use from your sanctioned limit until it's paid back. You can get a loan of up to 85% to 95% of the value of your bank FD, with interest rates that are typically 1% to 2% higher than the rate of the FD that serves as collateral.
Loan on Gold
In India, gold is unquestionably the most popular investment. Because of its long history and cultural significance, gold is preferred by all social classes. Taking out a loan against gold is a common practise in India because of the widespread availability of this asset. Some of the key features of gold loans are their quick disbursements, short payback terms of up to three years, high loan-to-value ratios (LTVs) of up to 75 percent, and a variety of flexible repayment options other than the traditional EMI.
Loan Against Property
When you need money, you take out a loan against a piece of property that you already own. Loans against property are available from a wide range of lenders, including commercial, residential, and industrial lenders. Banks are also among the lenders. The amount of the LAP loan is determined by the market value of the property and the LTV ratio of the lending institution, which typically ranges from 50% to 75%. LAP can be paid back in as little as 15-20 years, depending on the borrower's ability to make on-time payments. Reverse mortgages are another option for pledging property for money, and they are designed specifically for people who are elderly and need money. Detailed information about it can be found on this page. There are a few lenders who will lend you money against your car as collateral, allowing you to take out a loan by handing over your vehicle. You will be given a loan based on a percentage of the market value of your vehicle. Credit card loans, on the other hand, offer an additional benefit to those who have credit cards.
Loan Against Securities
If you're an investor, you may not be aware of the possibility of taking out a loan against the value of your securities. A variety of financial instruments are included in the term "securities." Borrowers may use their securities as collateral instead of selling them. With market-linked assets, such as bonds, mutual funds, and stock market investments in which you may need to lose money and then redeem it when your portfolio is in the red, this feature comes in handy more than most. Taking a loan against your securities allows you to continue to reap the benefits of your investments, including interest, dividends, and bonuses. When it comes to the loan amount, it all depends on the collateral and the LTV ratio assigned to it by the lender.
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