Do you need more cash? If so, you can pledge your mutual fund investments to a bank/NBFC and get a quick loan online without impeding your financial goals. Borrowing against mutual funds is becoming popular among individuals who need instant cash for short-term needs but want to keep their MF holdings private.
This loan against mutual funds online provides an easy and convenient way to obtain quick funds. It is a method of converting your MF units into cash with minimum paperwork. The process of getting such a digital loan against securities is quite simple. Here is how you can obtain immediate cash by pledging your MF holdings.
Knowing Your Eligibility
Knowing if you are eligible for an instant loan against securities is the first step when considering borrowing. Make sure you fulfil all the requirements set by financial institutions for loan approval. You may need to submit your PAN card, address proof (Aadhaar card/Driving License/Passport/Voters ID), Photo, Signature, and Bank statement to apply for a loan. Then, assess your MF holdings’ current market value and determine how much you can borrow against them.
Approaching the Right Lender
The second step towards getting a loan on mutual funds includes finding a lender that meets your specific borrowing needs. There are several banks and NBFCs out there offering this facility. However, some have different interest rates, processing fees, loan plans, and terms & conditions. That is what may lead you to the selection dilemma. To make it simple and convenient, you may choose a lender that offers lower loans against mutual funds’ interest rates, charges bare minimum processing fees, guarantees quick disbursal, and facilitates zero pre-closure charges and paperless applications. If you have yet to learn what could be the best bet, Abhi Loans is where you can pledge your mutual funds to obtain immediate cash without worrying about your credit score.
Understanding the Application Process
After selecting the lender that you think is suitable for your borrowing needs, it is time to understand the application process, which might also vary from one institution to another. It is up to you whether you want to apply online or offline. Since the former is quicker and more convenient, it makes sense to use the online application when you need instant cash.
While filling out the application form online, you must submit your KYC documents with your photograph and bank proof and agree to the terms and conditions of the lender. So, read the loan agreement carefully before signing it. Then, it comes down to marking the lien on your mutual fund units. After all, the lender will assess your eligibility for the loan against mutual funds based on the LTV ratio calculated. Once the loan is approved, the lender will disburse the loan amount into your account. While some lenders might take days to approve and credit the loan amount, others, including Abhi Loans, do this within hours.
The loan amount you will get depends on the value of the MF units you pledge as collateral. The interest rate, which with Abhi Loans might start from as low as 8% per annum, will be based on the EMI plan you take. The foreclosure option is also available with the loan against mutual funds online. If you take it from institutions like Abhi Loans, you need not worry about the prepayment charges.