Loan Against Assets - Financial Instruments against which you can take a Loan
Investments are meant to be made for long-term. However, these investments can be used to take short-term loans when need arises. Personal loan is the most widely known loan people resort to when in need. Little do they realise that one can take loan against some financial instruments too.
Loan against Gold
As the name suggests, one can take loan against physical gold. As per the RBI rule, the loan to value (LTV) is maximum 75%. This means that if the value of your gold is Rs. 100, you are eligible for a loan of Rs. 75. The interest rate ranges from 12-17%. During an emergency, one can opt for gold loans, instead of applying for a personal loan with a bank.
Loan against Life Insurance Policy
A person can also take loan against his life insurance policy. An individual is eligible for a maximum loan of 85-90% of the surrender value. The interest rate ranges between 9-10%.
Loan against Fixed Deposit
One can also avail a loan against his fixed deposit. However, the minimum tenure of the loan is the term of fixed deposit. The maximum loan to value (LTV) is 90% of the deposit amount. The interest rate charged by banks is around 2-2.5% higher than interest paid on deposit by banks.
Loan against Residential Property
A loan against residential property can be availed too. The interest rate ranges between 11-15%, while the maximum tenure of the loan is generally 15 years. The loan to value is maximum 75% of the value of the property.
Loan against Shares
An individual can take loan against equity shares. The amount and tenure of the loan depends entirely on the banks. The interest rate for this type of loan ranges between 11-16%. The loan to value is a maximum of 50% of the value of the shares.
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