What Are the Interest Rates and Repayment Options for a Loan Against Shares?

Interest rates on loans against shares usually range from 8% to 24% per annum. The interest rates and repayment options for loans against shares vary across lenders and are influenced by several factors.

• Higher loan amounts, longer tenures, and pledging of risky shares can attract higher interest rates.
• Interest is payable monthly or quarterly. Simple or reducing balance interest calculation methods may be used.
• A higher credit score, income level, and relationship with a financial institution may qualify for lower rates.
  The prevailing market risks and the Reserve Bank of India’s (RBI's) repo rates influence the loan provider's marginal costs and rate offerings.
  Repayment Options

Here are some standard repayment methods:

• Monthly Equated Monthly Instalment (EMI): The most common option is to pay monthly EMIs, which comprise principal and interest components and are structured over the loan tenure.
• Bullet Repayment: The principal amount is repaid in one lump sum payment at maturity, while interest costs are serviced through the tenure.
• Overdraft Facility: A loan against shares allows applicants to open an overdraft account with a sanctioned limit. Interest applies only to the utilised amount.
• Part-Prepayments: Many loan providers permit part-prepayments through tenure without penalty charges, allowing faster repayment.