The easy guide to applying for loan against securities

Your LAS application process can be a breeze after understanding the features of the loan.

There comes a time in the growth cycle of every business, when taking a business loan becomes imperative to upgrading the business, acquiring new machinery, or purchasing new commercial premises. At this juncture, a deft solution is to take a loan against shares.

The loan against shares, as the name suggests, is a loan offered to you after you pledge your shares as collateral with a bank or financial institution. This option lets you monetise your owned securities at short notice, so that your business goals remain on track and you don’t have to liquidate your other assets. The only stipulation is the shares you pledge must be your own, and before applying for a loan against shares, find out from the prospective lending institution about their:

1. List of approved securities. Every bank and financial institution has a list of approved securities that they can offer a loan against. It is prudent to ask for this list from your preferred financial institution before you apply for a loan against shares. This will save valuable time for both you and the lender.
2. Rate of interest. The lending institution will offer you the loan against shares at a certain rate of interest. Find out the rate of interest being offered by at least three other comparable lenders before you make your decision. Interestingly, the interest charged on this category of loans is lower than that of personal loans or credit card loans. You are charged interest on the balance loan amount in your overdraft account.
3. Terms of use. Once the loan is approved and disbursed, you have the freedom to withdraw the funds as you wish. You are not required to withdraw the entire loan amount at once. You can use the money in stages as per your requirement. If you apply for loan against shares from a bank, you will be given an ATM card linked to the overdraft account, and you can withdraw money using the ATM card. Also, you can repay the money in equated instalments and incremental sums paid every few months.
4. Special factors. In most cases, the charges for processing the loan application, maintaining the overdraft account, stamp duty and registration of the loan agreement between you and the lender, etc. will be mentioned in a separate schedule of fees.

Personal finance manual: 5 rules to live by

We compile five financial planning rules that will help you amass wealth and keep you safe from future uncertainty.

Most of us wish that there was a manual we could follow that told us exactly how to get rich using the money we make. While you may or may not subscribe to the ideas that many financial experts put forth in books and TV shows, you must agree on one fact: your fiscal health needs a rulebook to live by!

And so, we compile 5 personal finance rules that will help you create wealth for the future:

1. 1 The 10% post tax rule. Rule #1 of your personal finance manual should be ‘Pay yourself first’. This means that you must set aside savings the moment you get paid. Most people do this in reverse – they try to save money from whatever is left of their income at the end of the month. Instead, set aside 10% of your post-tax income per month for a couple of years. When your income increases, you can increase this percentage to 15% for more savings.
2. 2 The 50% only rule. How much of your income should you spend on daily living? As much as you need, or as much as you can afford – or a little of both? The answer is: Spend only about 50% of your income on bills, groceries, travel, occasional recreation, children’s expenses, other household costs, etc. The remaining can be split into savings, children’s education fund and emergency fund.
3. 3 The emergency fund. Emergencies always strike without warning – there are no cautionary bells and whistles to tell you that a disaster is on its way. And so, it is vital that you prepare for any future crisis with an emergency fund that you build along with your savings. Aim to invest at least 5% of your income in this fund every month. You could operate a seldom-used bank account to stow away this money.
4. 4 The loan conundrum. Rare is the person who has not had to borrow a loan to finance a personal or professional need. From buying a home, to investing in your start-up, and from needing money for your child’s education, to paying for your parent’s hip surgery, a loan can finance a variety of needs. If you want money to pay for your own wedding, or book a special holiday or even to buy a new bike, you can simply opt for a personal loan. Do check your personal loan eligibility first!
5. Lifesavers’ special. Life and health insurance have become vital in today’s world of lurking health conditions and rising inflation. Stress, undiagnosed illnesses and high living costs all strain your resources when you fall ill. Your loved ones might also be left floundering if you are not in their midst in the future. So if you are thinking of investments, think of life and health insurance.