Digital loans secured in the form of loans against mutual funds holdings have become a novel and simple way to raise money. The redemption of MF holdings can be avoided by using the mutual funds’ investments as collateral for loans against securities to get money amid difficult financial times.
Regardless of the reason for the loan, one can apply for a loan on mutual funds. It is beneficial because many people tend to withdraw money from their savings or sell their mutual fund assets at a loss.
Offering loans on a person’s or an organization’s mutual fund assets has become a reality, and many digital lending businesses offer their customers lending as a loan on mutual funds.
To provide borrowers with digital loans, mutual fund investments are used as collateral to secure the loan. And the good thing is a loan against securities interest rates are lower than other types of unsecured loans.
These investments don’t have to be limited to equity funds or debt funds; both serve as collateral. Since the entire process is digital, folks who enjoy online banking can access loans almost immediately.
Abhi Loans and other such NBFC lenders offer completely digital solutions, and the customers can avail of a loan against shares or loan on mutual funds within hours.
Advantages of Personal Loan Against Mutual Funds
Flexibility to use the money
This type of loan offers the flexibility to use the money for a variety of purposes, from consolidating debt to financing a home renovation project and more. With competitive rates and easy repayment terms, this solution can provide much-needed financial relief when funds are scarce.
Speed of funding
Generally, the disbursal process of a personal loan may be longer than that of a loan against mutual funds. And if you take it from Abhi Loans, a leading NBFC, the disbursal is possible in a matter of hours. Plus, the loan against securities interest rates are lower than unsecured loans.
A personal loan requires having a good credit score. The higher it is, the easier you get the loan. Contrary to this, a loan on mutual funds does not necessarily require you to show your credit report. Some lenders check your credit history, while others, including Abhi Loans, do not.
Fixed interest rates
Personal loans typically come with fixed interest rates, so borrowers can know what the monthly payments for the duration of the loan are. On the other hand, loans on Mutual funds come with variable returns, so it can be harder to predict how much one can earn from them. NBFC companies propose attractive services to customers with limited or no processing fees and offer quick services to customers.
Interest payments on personal loans are not tax-deductible. However, some of the tax benefits associated with mutual funds, such as capital gains, may not apply to short-term investments and may be subject to tax if the funds are sold within a short period after buying. It makes a loan on mutual funds a good choice.
It is important to note that a personal loan is a debt. So, it should be used responsibly and wisely. Before availing of a loan, it’s crucial to carefully consider the ability to repay it and to compare the terms and fees of different loans on mutual funds or loans against securities interest rates to ensure to grab the best deals.