It is a common practice not to use the funds available in your savings account to cover big expenses such as buying a car or a house. Most individuals take out loans to cover these expenses, as paying from their pocket can significantly lower their savings, leaving them with inadequate cash for emergencies and other unexpected costs. However, most lenders require borrowers to put up collateral against which they give out loans. This is because lenders want an asset as a security to protect them against loan repayment defaults made by the borrower.
When it comes to collateral, lenders consider numerous assets when granting loans. Bajaj Finance is one of the leading institutions offering loans against various assets. Two of the most popular are loans on securities (LAS) and loans against property (LAP).
Let us understand the differences between LAS and LAP and how you can apply for these loans from Bajaj Finance.
What is a Loan Against Securities (LAS)
A loan against securities is a type of loan where investors put up their investments in various securities, such as equities, mutual funds, bonds, etc., as collateral to take a loan. Institutions like Bajaj Finance review and estimate the current value of the securities at the time of the loan application and provide a certain portion of the value as a loan. In this case, the loan-to-value (LTV) ratio is used to determine the loan amount.
For instance, if a lender's loan-to-value ratio for securities is 50%, the borrower will receive a loan amount equal to 50% of the assets' total value held in the portfolio.
How does a loan against securities work with Bajaj Finance
Here is how loan on securities works with Bajaj Finance:
- Security valuation: When you apply for a loan against securities with Bajaj Finance, the value of your securities and their current liquidity are evaluated. Once determined, the company communicates the loan amount you can get based on the value of the securities.
- Loan documentation: While applying for a loan against shares with Bajaj Finance Ltd, the borrower needs to provide the following documents prior to entering a loan agreement.
Documents
- KYC documents:
a. Passport
b. Driving License
c. Voter’s Identity Card
d. Aadhaar
e. Job Card issued by NREGA
f. Letter issued by the National Population Register
- PAN card
- DEMAT holding statement
Loan approval: After analysing the collateral, Bajaj Finance approves the loan amount after all the terms and conditions are met by the borrower.
Loan disbursement: Upon approval and execution of loan documentation and creation of pledge in to the satisfaction of Bajaj finance Ltd, the borrower receives the loan amount in their account. The money is available to the borrower for any legitimate use.
Repayment: Following loan disbursement, borrowers must return the principal amount plus interest in accordance with the established repayment arrangements.
How to apply for a loan against securities with Bajaj Finance
Here is the process you can follow to apply for a loan against securities with Bajaj Finance:
- Step 1: Visit the LAS page on the Bajaj Finserv website.
- Step 2: Click ‘APPLY ONLINE’ to visit the online form.
- Step 3: Enter basic details such as name, phone number, email ID, city, etc.
- Step 4: Select the types of securities you want to pledge and the total portfolio value.
- Step 5: Click ‘SUBMIT’ after filling out the form.
- Step 6: Once you have submitted the form, you will receive a confirmation mail and SMS about your loan application status.
- Step 7: After the application is successfully submitted, a representative from Bajaj Finance will contact you to request the submission of all the required documents and other details.
What is a Loan Against Property (LAP)
A loan against property is a type of loan that requires borrowers to put up a property they own as collateral. Here, the property can be any residential or commercial real estate owned by the borrower at the time of loan application. Lenders such as Bajaj Finance analyse the property and determine its current market value. After evaluation, lenders provide the loan amount based on the LTV ratio.
How does loan against property work with Bajaj Finance
Here is how Bajaj Finance’s loan against property works:
- Property evaluation: After a borrower applies for a loan against property with Bajaj Finance, the property is evaluated property to determine its current market value.
- Loan approval: Based on the LTV ratio and the property's current market value, Bajaj Finance approves the loan amount following the property evaluation. However, the applicant must fulfil all requirements before the loan is approved.
- Loan disbursement: Following a successful loan approval, execution of loan and security docuemntation, the borrower receives the loan amount immediately in their bank account from Bajaj Finance.
- Loan repayment: In accordance with the terms of the loan agreement, the borrower must return the loan amount, plus interest, within a certain period. Until the loan is fully repaid, the company will hold the property.
How to apply for a loan against property with Bajaj Finance
Here is the process of applying for a LAP with Bajaj Finance:
- Step 1: Visit the LAP page on the Bajaj Finserv website.
- Step 2: Enter your city’s PIN code and click ‘PROCEED’.
- Step 3: Enter basic details such as your name, email ID, mobile number, city, etc.
- Step 4: Select the type of loan, your net monthly income, and the desired loan amount.
- Step 5: Generate and enter the OTP received on your mobile number.
- Step 6: Enter further details such as property location, EMI amount, PAN number, etc.
- Step 7: Click on the ‘SUBMIT’ button.
- Step 8: After the application is successfully submitted, a representative from Bajaj Finance will contact you to request the submission of all the required documents and to proceed with the application.
Bajaj Finance provides loans on securities where you can pledge the securities held in your portfolio to receive a certain portion of their current value as the loan amount. You can also take a loan against property (LAP), where you can put up a property you own as collateral for borrowing a certain loan amount. Since you can use the loan proceeds for any legitimate purpose, taking a LAS or LAP can help you cover significant expenses without burning a hole in your savings.
Visit the Bajaj Finserv website to apply for a loan on securities (LAS) or a loan against property (LAP) today!
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