A loan against securities is offered against the value of bonds, shares, and other securities. This loan type has been quite unheard of, until recently, because Indians generally prefer investing in low-risk investments like recurring deposits, PPF, mutual funds, and others.You can get a loan by leveraging your equity shares, equity mutual funds, FMPs, KVP’s, non-convertible debentures, gold deposit certificates, and T-Bills. The 100% debt mutual fund offers a high loan to value ratio and can be used to avail of a higher loan amount.Here are some questions you might have about a loan against securities, answered:What’s the Eligibility Criteria?The primary eligibility criteria include-You should be an Indian residentYou should be at least 25 years old at the time of loan sanctioningBoth salaried and self-employed individuals should have a regular source of incomeYour securities need to have a minimum value of Rs.25 lakhWhat’s the Loan Application Process?The possibility of you getting a loan against shares depends on the current market situation and also your portfolio. You need to meet the eligibility criteria and have all the valid documents, ID proof, and share certificates.You can apply for the loan online and get instant approval when you have submitted all the required documents. If your loan application gets approved, then a current account would be opened in your name. You would be given an ATM card or a cheque book to help you cash the loan. Interest is charged only on the amount withdrawn and the period in which it is utilised.What are the key Benefits of this Loan?A lot of people are turning to a loan against securities when they are in need of finances. Its hassle-free processing and immediate sanctioning make it a viable option for loan seekers.Unlike other loans, you can avail this loan without a guarantor. Apart from the securities you pledge, you don’t need to submit any other collateral. You can take a loan of up to Rs.10 crore by mortgaging your shares. The best part is that you can still earn profit from the performance of your shares without losing ownership of them.You can even swap the securities you have pledged during the tenure.What Precautionary Measures Should I Take?Scrutinize your current financial situation to gauge whether a loan against shares is the right move for you. Make sure that you have the necessary resources to repay the loan before you apply for one.Do your own research and compare the different loan against securities interest rates in the market. Avoid using the loan for buying more securities since its a high-risk investment. Most of the lenders have a clause that prohibits the use of the loaned amount for such investments.Keep an eye out for latest market trends, as the security values keep fluctuating on a weekly basis. The volatility of the stock market will also influence your loan amount. Make sure you read up on all the terms and conditions involved before you sign in on any loan. If you are up for the risk involved, a loan against shares is a convenient alternative to the traditional money lending process.