Get loan against shares

There are three types of people in the world when it comes to those in need of money – one with good credit score looking to borrow money for their immediate needs like buying a home, medical need, education purposes etc.

There is the next category who do not have a credit score as they are newly employed or have never had the opportunity to take a loan or credit card in their life so far. Then there is the last category who are people with very poor credit score, who have taken loans but have defaulted or made late payments on their EMI.

Now getting a loan for the first category is very easy. They already have a history of good credit report and are the ideal customers banks are looking for. They will get discounted rates and larger loan amounts.

With the second category who have never taken a loan or credit card banks will look at their salary, the company they work for and other liabilities before giving them a loan. Here too it is fairly easy to get a loan.

It is with the third category that problems arise. Since these people have a bad credit score which indicates that they have negative events on their credit report it will be extremely difficult for them to get a loan. Unless they provide a collateral bank will not give loans to people with bad credit. Even if they do it will be with high interest rate and lesser tenure which will make it difficult for the borrower to pay back the loan.

Here we are going to talk about getting loans by pledging shares which is a type of secured loan that anyone of the 3 categories can choose from to get a loan at very competitive rates.

What is loan against shares?

Loan against shares is where a borrower pledges shares either physical or dematerialized(preferably) as collateral for a loan. The shares pledged will be of big companies and subject to the market rate on the day the loan is availed. The loan amount will be about 50% - 80% of the value of the shares.

The loan amount will be set up as a current account where only the funds utilized will be subject to interest.

Who can avail loan against shares?

This loan is a short-term loan and is best suited for people looking to pay off the debt within a year at the max. If you think you cannot payback by then it is best to go for other options. The rate of interest varies from 12% to 15%.

Why go for loan against shares?

When you take an unsecured loan the interest rate will be high compared to a secured loan. Also, unsecured loans will not be given to people with bad credit. Instead of selling your stocks or going to a local lender who charges exorbitant interest rates you can go for loan against shares where you don’t have to sell your asset the shares and you can get a great deal.


It is always advisable to go for a secured loan for people with bad credit while people with good credit can get a loan against shares to get better rates and at the same time make your asset work for you without selling it.