Saturday, 23 October 2010

Get Loan from your investments

When you need money for any urgent matter, it is easy to get a loan from your banker. Most of us go for an easy loan. Most of the credit card issuing institutions provide loan easy and fast to their prompt customers. But the interest rate is very high and also should give some service charges. You may be aware that banks and financial institutions charge high rate of interest for unsecured loan such as personal loan, education loan etc. The better way to escape from high interest rate goes for some secured loans. Most people think that only hose property can be pledged for secured loans. Your other investments such as gold, financial instruments, government securities, shares etc., also can get you an easiest and low interest loan by pledging them as collateral securities. Let us discuss some of them.

Gold Loan

You can take a secured loan by pledging gold in any form such as gold coin or gold ornaments. Different banks allow different sum of loan against the value of gold you are pledging. You have to submit identity proof and address proof with the gold and banks are allowed loan within one hour. Some banks take one working day to complete the paper work and sanction the loan. Normally no EMI payment is necessary for this loan and the loan will be sanctioned without considering the credit history of the borrower. Only a minimum documentation is required for gold loan. The interest rate varies from bank to bank and the minimum interest is around 9% per annum and the interest is calculated on reducing balance only. When you go for a gold loan better to take it from nationalized banks, scheduled banks or form Co-operative banks because the interest rate is comparatively low in these banks than other financial institutions.

LAP or Loan against Property

If you have a freehold residential property or commercial property without any dispute or any liability over it, you can take loan against that property. You have to submit the documents of the property, identity proof, residence proof, and proof of signature, age, and income and bank statements for getting this loan. But the time period of sanction the loan is comparatively high. It may take around 15 days to sanction the loan after verification of the property and documents. Interest rate may be quiet high than gold loan and the amount of loan depends upon the value of property and the income of the borrower. Pre-closure of loan, partial repayment, increasing loan amount and refinancing are also possible as per the terms of the financial institution.

Top up loan

This is also a possible low expense loan from the financial institution where you already have a housing loan or mortgage loan. Read more about Top up loan

Loan against NSC, KVP and Fixed Deposit

You can take loan against all financial instruments such as NSC (National Savings Certificate), KVP (Kissan Vikas Patra), Fixed Deposits etc. For getting loan you have to pledge the certificate with your residence proof and identity. Only the owner of the certificate can take loan against such financial instruments and the loan may be sanctioned within one or two days. The interest rate will be 4% to 5% more that the interest rate of NSC or KVP and in case of fixed deposits it will be 2% more that the rate of Fixed Deposits. The loan amount may be varied according to the time period of the instrument and the years completed after purchasing the instrument. Minimum documentation and the loan should be pay off before the maturity of the instrument. Unless the bank will collect the maturity value and settle the loan. You can payoff in EMIs also.

Loan by Pledging Shares and Mutual Funds

You can take loan against the fully paid up shares of Companies and the units of reputed Open ended mutual funds. Only individuals can take this loan. Banks allow loans only for the shares which are in their approved list. You have to submit the Proofs of identity, signature and address, Transfer Deeds, Demat Pledge Forms, and Power of Attorney. Some banks require the borrower to transfer the shares in the name of the bank. Loan will be sanctioned only after the verification of shares and documents and it takes around one or two weeks to sanction the loan. The main advantage is that you can have money without selling of the shares and the shares can keep for long term.

Loan from your Life Insurance Policy

You can take loan against your life insurance policy from the insurance company or any banks. Interest rate is very low and at present it is around 9% per annum. Within one or two days the loan will be sanctioned and the loan amount depends upon the surrender value of the policy and the policy with endowment nature is suitable for pledging. The original policy document should be submitted for loan and it will be kept by the institution till the loan payment is over.

Loan aginst PPF (Public Provident Fund)


Normally you can withdraw money form PPF only after the 6th year  of starting the PPF. But you can take loan from PPF after 3 years and and the tennure of laon is only for 2 years and you have to pay 2% more interest for this loan. After paying off the loan you can take another loan also up to 6th year of the commencement of PPF. Minimum documentation and within one day you can get the loan.

Your investments are not only for getting income or profit but for availing loans in emergencies. If your requirement is only for a short period, better go for these loans and keep the investment intact.

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4 comments :

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  2. while looking through your webpage,i received what information i need,thank you

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  3. [...] of Rs. 20000, 30000, 40000 and 50000 each and within the number of months you can finish your loans, total amount of prepayment in each prepayment options and the last column show the amount of gain [...]

    ReplyDelete
  4. santoshkumar pasnur11 May 2011 at 04:04

    Very good information regarding saving is avilable. Very nice Thank u.

    ReplyDelete