A Loan Against Securities is a type of Loan in which a borrower pledges securities, such as Stocks, Mutual Funds, Bonds, and other financial assets, as collateral to get a Loan from a lender. This allows individuals to leverage their investments and receive immediate liquidity without having to sell their securities.
The Loan Against Securities calculator helps estimate the interest payable on the utilised amount for the duration. You can calculate the interest based on your credit usage, while understanding your repayment obligations and efficiently managing your Loan.
LAS is an overdraft facility, and interest is charged only on the limit utilised for the period. The LAS calculator enables you to make informed decisions based on your repayment plans and financial capacity.
Method to calculate LAS amount
The following are the ways you can use to calculate the LAS amount on the calculator:
- Identify the market value
To determine the market value of securities pledged for an Instant Loan Against Securities, you need to find the current trading value of the assets you use as collateral. This involves checking financial websites or your broker for the latest prices. The Loan amount is then calculated as a percentage of this market value, known as the Loan-to-Value (LTV) ratio.
- Calculate the Loan amount
The LTV ratio is a percentage that determines the maximum Loan amount based on the market value of your securities. Lenders typically have specific LTV ratios for different types of securities. You can borrow between Rs. 5 lakh to Rs. 20 crore against these financial assets at floating interest rates ranging between 9.75% to 11.50% per annum. Multiply the market value of your securities by the LTV.
- Lender’s discretion
Different lenders may have different LTV ratios and maximum Loan limits. Ensure you are aware of their policies before applying for a Loan. They may deduct processing fees or other charges from the final Loan amount. Consider these fees when calculating the actual amount you will receive.
Factors influencing LTV
Several factors influence the Loan-to-Value ratio. Fluctuations in share prices can affect the LTV ratio. Blue-chip stocks often have higher LTV ratios than less liquid or volatile securities. Different lenders have varying criteria for determining LTV ratios. Your credit score and repayment history can also impact the LTV offered.
LAS calculator
The Loan Against Securities calculator helps you estimate the interest on the overdraft offered based on the Debt or Equity security value. It lets you make informed decisions depending on your financial capacity and repayment plans.
You need to select the security type, enter the Loan amount, Loan Against Securities interest rate, amount or percentage to be utilised, and the duration of credit utilisation in months in the respective sections, and you will get the interest amount for the specified period.
Conclusion
Borrowers can access this overdraft facility by pledging their securities with the financial institution. They are only liable for interest payments on the withdrawn amount for the duration of usage.
