How to Get Unsecured Loan Using Stock

How to Get Unsecured Loan Using Stock is not something that is hard to answer these days. In fact the process is bit easy. Using stocks as collateral is something that should be done with care.

This is actually the best alternative option for you especially if you don’t have money but have stocks to use as collateral.

An unsecured loan using stock is borrowing money from some bank or lender while keeping ‘stocks’ as collateral. Other commodities can also be kept as collateral but that depends upon the type of bank, nature of loan and lot of other aspects. Obtaining a loan using stock as collateral is very crucial step in the success of your business. If in case, you are unable to lift up your business from the borrowed money, you will also lose your stocks that eventually end up with ‘nothing’. Therefore getting unsecured loan using stock as collateral should be made with great care and intelligence.

Several Additional Expenses

You are required to concentrate on each and every aspect of a loan. You should add fees and other hidden expenses that may pop up at the time of applying for loan. Unsecured loans which are issued keeping stock as collateral have higher markup rates as compare to ordinary loans. They are high by 1% - 2%. These extra charges are due to the nature of the collateral. As long as the lender holds the stocks, he is legally allowed to profit from the increase in the rates of stocks. In some cases, lender is even allowed to sell or buy equal worth of shares.

You can Lose your Stock

If you want to get back your stocks anytime in between the loan term, you are required to pay the difference or the increased price of the stock. This is because of the fact that once you give your stocks to the lender, he becomes the complete owner of the stock and owns all the rights and profits gained on it. As also stated earlier, sometimes lender decides whether he will give back the stocks or not. Many times, private lenders can acquire those stocks against the lent money. This is the simplest way of profiting from your money. If the overall price of the stocks increases the lent money, you can opt to acquire the stocks.

Stock as a Good Option to get Loan

A person who is unable to get loan for his business, but owns a stock, then he can get the loan against this stock. This is very good option or feature available for those who do not have sufficient resources but keep some stocks.
You should contact the lender in detail in order to get the unsecured loan using stock. He will guide you with his term and conditions in addition with all the policies that will be applied on the loan. You are required to learn all of those policies in order to safeguard your business and stocks.

1 Comment

  • Kiplangat k ronoh said on February 25, 2013
    Am a kenyan from kericho county a tea farmer. i would like to diversify farming inro growing apples ,i need grant to start this business of apples.


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