5 financial instrument against which loan can be taken
Loans can be availed against various instruments such as –Loan against Gold, Shares, Life Insurance Policy.
Savings are used to purchase properties and financial instruments like shares, fixed deposit, and gold from an investment point of view. Usually, people go for a personal loan to fund their financial needs, generally emergencies. However, there are many financial instruments against which a person can take loans when needed. Below mentioned are some of the financial instruments against which loan can be taken.
| Interest Rate (p.a.) | Loan to Value (LTV) | |
| Loan against Residential Property | 11%-15% | 60%-75% |
| Loan against Shares | 11%-22% | 50% |
| Loan against Gold | 12%-17% | 75% |
| Loan against Fixed Deposit |
2%-3% higher than the fixed deposit rate |
90% |
| Loan against Life insurance policy | 9%-10% | 85%-90% |
1. Loan against Residential Property
Residential property can be used to take a loan. An investor can take a loan of 60-70% of the value of the property. The maximum tenure of the loan is 15 years and the interest charged on the loan ranges from 11%-15% p.a.
2. Loan against Shares
A person can take a loan against his investment in equity shares. The interest rate ranges from 11%-22% p.a. The tenure and value of loan sanctioned depend on the banks or NBFC. Generally, financial institutions give a loan up to 50% of the value of shares.
3. Loan against Gold
One can also take a loan against physical gold. As per the RBI guidelines, the maximum loan to value (LTV) is 75%. The loan is given for maximum 24 months and the interest rate ranges between 8%- 28% p.a.
Read about the differences between personal loan vs gold loan
4. Loan against Fixed Deposit
A person can also take a loan against his fixed deposit. The maximum tenure of the loan is the same as the term of the fixed deposit with the bank. The interest charge is 2%-3% higher than the interest given by the bank on the fixed deposit. The LTV is maximum 90% of the amount of the fixed deposit with the bank.
5. Loan against Life insurance policy
A person can take a loan against his life insurance policy, endowment policy. The maximum loan amount sanctioned is 85%-90% of the surrender value. Interest charged on the loan ranges between 9%-10% p.a.
Conclusion
Generally, individuals go for a personal loan when the financial needs or emergencies arise. But, an individual can also take a loan against his investment. A person looking out for a short term loan should go for a loan against shares and gold. Fixed Deposit can be used to take both short term and long term loan. Residential property helps a person to take a loan for the longer period.
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