Looking for quick and secure funding, but don’t want to liquidate the portfolio? In that case, loan against securities is an excellent solution. With it, you can access funds while keeping your investments intact.

But there’s a key factor in the midst of these benefits—interest rates. Loan against securities interest rates can vary significantly—from 5% to 20%—based on the lender, collateral type, and market conditions. Lower rates mean cheaper borrowing, but navigating the fine print is crucial to avoid hidden costs.

So in this blog, I’ll explain these interest rates and show how you can get the best LAS financing plans effectively. Let’s begin with the “What”.

What is Loan Against Securities?

A Loan Against Securities (LAS) is where you pledge your financial assets like stocks, mutual funds, bonds, etc., as collateral to avail funds. Unlike selling your investments, this secured credit facility allows you to retain ownership while accessing liquidity.

Key Highlights of Loan Against Securities

  • Retain Ownership: Borrow without selling your investments; continue earning potential market returns.
  • Lower Interest Rates: Typically 9-15%, cheaper than personal loans or credit cards due to secured nature.
  • Quick Disbursal: Faster processing than unsecured loans, often within 24-72 hours.
  • Flexible Repayment: Choose between EMIs, interest-only payments, or bullet repayment.
  • High Loan-to-Value (LTV): Get 50-90% of your securities’ market value as a loan.
  • No End-use Restrictions: Use funds for emergencies, business needs, or big-ticket expenses.
  • Tax Efficiency: No capital gains tax (unlike selling assets), making it a smarter liquidity option.

And since you are leveraging existing finances, there’s fewer paperwork as compared to traditional loans. But what about the topic in question, interest rates?

Loan Against Securities Interest Rates

Interest rates on loans against securities are a crucial factor in determining affordability. They typically range between 5% and 20%. They are lower than unsecured loans since your investments act as collateral.

The interest rates for loans against securities will depend on factors like:

  • Type of Securities Pledged: Blue-chip stocks and liquid mutual funds attract lower rates vs. volatile or low-liquidity assets.
  • Loan-to-Value (LTV) Ratio: Higher LTV (up to 90%) may come with slightly higher rates.
  • Borrower’s Credit Profile: Strong credit score & relationship with lender can secure better rates.
  • Market Conditions: RBI repo rate changes & lender policies impact floating rates.

For a better idea on what the interest rates for your financing will be, get our loan against securities funding.

How to Lower the Interest Rates on Loan Against Securities?

A loan against securities offers quick liquidity, but the interest rate significantly impacts your repayment burden. Here’s how you can negotiate better rates and optimize borrowing costs.

Choose High-quality Collateral

Lenders offer better interest rates when you pledge stable, liquid securities like large-cap stocks, sovereign bonds, or top-rated mutual funds. These assets have lower volatility, reducing the lender’s risk.

If you offer blue-chip stocks or government securities, you may secure rates at the lower end (9-11%), compared to riskier small-cap stocks or low-liquidity bonds.

Maintain a High Credit Score (750+)

Even though LAS is secured, your creditworthiness still matters. A CIBIL score of 750+ signals strong repayment discipline, potentially helping you negotiate 0.5-2% lower rates. Lenders may also waive additional processing fees for borrowers with excellent credit history.

Opt for a Lower Loan-to-Value (LTV) Ratio

Borrowing only 50-70% of your collateral’s value (instead of 80-90%) reduces the lender’s risk, often resulting in better interest rates. A lower LTV also minimizes the chance of margin calls if market prices fluctuate.

Negotiate Tenure & Repayment Structure

Shorter loan tenures (6-12 months) usually attract lower rates than longer terms. Additionally, opting for bullet repayments (paying interest monthly and principal at maturity) can sometimes secure better terms than EMIs.

Interest rates fluctuate based on RBI policy changes and liquidity conditions. If the repo rate drops, lenders may reduce LAS rates. Timing your loan application during a low-rate cycle can save significant interest costs.

Lower interest rates is something every loan borrower desires. Well, with Nihal Fintech, you can explore the LAS options and ensure you get the best possible financing.

FAQs on Loan Against Securities Interest Rates

Are LAS interest rates fixed or floating?

Most lenders offer floating rates, linked to benchmarks like MCLR or repo rate, meaning your EMI may change over time. Some institutions provide fixed-rate options, but these are less common.

How does my credit score affect LAS interest rates?

A high credit score (750+) can help you negotiate 0.5%-2% lower rates since it reflects lower risk for the lender. Some banks may even waive processing fees for high-score borrowers.

Which securities get the lowest interest rates?

Liquid and stable assets like blue-chip stocks, sovereign bonds, and AAA-rated mutual funds typically qualify for the best rates (9-11%). Volatile or low-liquidity securities attract higher rates.

Can I prepay my LAS? Are there penalties?

Most lenders allow prepayment, but some charge 0.5%-2% foreclosure fees if repaid early (especially within 6-12 months). Always check prepayment terms before borrowing.

How quickly can I get an LAS?

Approval and disbursal usually take 24-72 hours if documentation is complete. Some digital platforms offer instant approvals against pre-approved securities.

Let’s Summarize

A Loan Against Securities (LAS) offers a practical way to access funds without liquidating your investments. But the interest rate you secure can make a big difference in cost.

You need to choose high-quality collateral, maintain a strong credit profile, and negotiate the terms wisely. Then you can minimize borrowing expenses while keeping your portfolio intact. Stay informed about market trends and opt for flexible repayment structures.

So, ready to leverage your investments for financing? Then consult with experts and evaluate your options today!