Why You Should Consider Taking Out Stock-Base Loans
As a common practice, when you need to borrow some funds from a financial institution, a collateral is often required. The securities that are normally used in most case include cars, property and other form of physical investments.
However, cases exist where a borrower may not be in possession of an acceptable collateral. However, a window has opened where borrowers can use their stocks to play the role of a collateral.
How much money the financial institution will advance to you will be dependent on the standard of your stock. The lender will require that you transfer a stock value equivalent to the loan amount to them.
Due to their immense benefits, most people are resorting to stock loans as opposed to mortgage loans. A credit appraisal is not conducted in this scenario thereby appealing to many borrowers.
It is a known fact that when people resort to borrowing, they are in most cases responding to an emergency situation. Seeking for a loan in the traditional format normally takes a lot of time and is mired in bureaucracy. It normally very time and fewer procedures to secure a stock loan.
Flexibility is another factor that motivates investors to go for a stock loan. Securing a loan against your stock is not subject to amount ceilings. Additionally, you can use the loan to finance any form of real estate.
The non-recourse of stock loans means that the lender cannot seize other investments of the borrower if payments are not made. The lender will hold on to the securities to offset the loan.
A borrower is cushioned against the market fluctuations of the stocks allowing him to exit the financial arrangement if the stock value falls. This he does without any adverse impact on his creditworthiness or retributive justice from the lender.
Throughout the period of the loan, the borrower is entitled to most of the benefits that his stocks can provide. As well he is still able to use the cash borrowed to make other investments.
In a traditional loan processing, the borrower is required to give the bank details of the purpose for which he is taking out the loan. A borrower uses the stock loan secured for the projects of his choice without needing to give an explanation to anyone.
You will be better off going for a stock loan agency that has been in the market for a considerable length of time. It is recommended that you check the reputation of the agency in the industry.
Ensure that the stock loan agency possesses requisite government permits to carry out the business. You must also ensure that the firm is adequately insured.