Loan Against Securities Interest Rates
Understanding how Loan Against Securities interest rates are determined — and how they impact your borrowing cost — can help you make smarter financial decisions.
What Is a Loan Against Securities?
A Loan Against Securities is a type of secured loan where you pledge your investments to a bank or financial institution in exchange for funds. The lender provides you with a loan amount, usually a percentage (typically 50–80%) of the market value of the pledged securities.
Unlike selling your investments, this option allows you to meet short-term financial needs — such as funding a business, paying education fees, or handling emergencies — without liquidating your assets.
You continue to earn dividends, interest, or capital appreciation on your pledged securities during the loan tenure, making LAS a flexible and efficient borrowing option.
How Are Loan Against Securities Interest Rates Determined?
Interest rates on Loans Against Securities are generally lower than personal loans or credit card rates because they are backed by collateral. However, several factors influence the exact rate offered to you:
1. Type of Security Pledged
Not all securities carry the same risk for lenders. Government bonds or blue-chip company shares are considered safer than small-cap stocks. Mutual funds with a stable NAV and long-term performance may also attract better rates.
2. Market Volatility
If the market is highly volatile, lenders may increase the interest rate or reduce the loan-to-value (LTV) ratio to manage risk. Conversely, in stable market conditions, you might enjoy lower interest rates.
3. Borrower Profile
Your credit score, income stability, and repayment history play a major role in determining your rate. A strong financial profile often means lower interest costs.
4. Loan Tenure and Amount
Shorter tenure loans may have slightly lower rates, while larger loan amounts might come with preferential pricing — especially for high-net-worth individuals (HNIs) or long-term customers of the lender.
5. Relationship with the Lender
Banks and NBFCs often offer special rates to their existing customers or those maintaining a high-value investment relationship.
Typical Interest Rate Range
As of 2025, Loan Against Securities interest rates in India generally range between 8% and 11.5% per annum, depending on the lender and the pledged assets. For loans against mutual funds or blue-chip shares, rates tend to be on the lower end, while loans backed by volatile or less liquid securities may attract higher rates.
Benefits of Loan Against Securities
1. Quick Liquidity Without Selling Investments
You can access funds within 24–48 hours without disturbing your long-term investment plans or losing potential market gains.
2. Lower Interest Costs
Because it’s a secured loan, the interest rate is significantly lower than that of personal loans or credit cards, reducing your cost of borrowing.
3. Flexible Repayment Options
Many lenders offer overdraft facilities, allowing you to pay interest only on the amount you use — ideal for managing short-term cash flow gaps.
4. Continued Ownership
Even though your securities are pledged, you remain the owner and continue to receive dividends or interest income from them.
5. No End-Use Restrictions
Funds can be used for almost any legitimate purpose — from business expansion and property purchase to travel or education expenses.
Final Thoughts
A Loan Against Securities is a smart and cost-effective way to unlock the value of your investments without liquidating them. By understanding how interest rates are determined and comparing offers across lenders, you can choose a loan structure that suits your financial goals.
Always review the terms carefully — including processing fees, margin calls, and prepayment options — before signing the agreement. When used wisely, a Loan Against Securities can provide the liquidity you need while keeping your wealth growing.
