What is Loan Against Securities (LAS)?
Loan Against Securities (LAS) is when you give your stocks, mutual funds, bonds, or other financial stuff to get a loan. You don't sell them, just use them as a guarantee. The amount you can borrow depends on things like what kind of securities/investments you have and how much it's worth today. LAS is getting popular because it's easier and cheaper than other loans like personal loans or credit cards. It's good for people with lots of investments who need quick cash but don't want to sell their investments. LAS interest rates are usually lower too compared to other forms of credit.

How Does Loan Against Securities Work?
Banks and NBFCs offer a type of loan called Loan Against Securities, where you use your stocks, mutual funds, and other investments as security. The amount you can borrow depends on the value of these investments. You can borrow money by giving these securities to the bank or NBFC. You only pay interest on the amount you actually use.

For example, if you have investments worth Rs. 500,000 and you borrow Rs. 50,000 for six months, you only pay interest on that Rs. 50,000. You can choose flexible repayment options, like paying both interest and some of the loan amount, or just paying interest with the loan amount subtracted from your investments. Sometimes, you can even pay back the entire loan using your investments. The loan might have to be paid back within a certain time frame, like 24 months.

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Benefits of Taking a Loan Against Securities Compared to Other Types of Loans

Getting a loan with your investments as security has some good points. First, the interest rates are usually lower than loans where you don't have to give anything as security, like personal loans. This is because the bank is more sure they'll get their money back.

Another good thing about this type of loan is you don't have to sell your investments. This means you won't lose any money or have to deal with taxes from selling them. You still get any money your investments make, like dividends or profits.