The need for additional funds can occur anytime. But, what should an investor do when he wants to acquire quick cash without compromising his existing investments? The answer to this ever arising situation is taking a loan on mutual funds.
For most of you, this might be a concept which is unheard of till date. However, it is still a common fund generating method used in India. The best part about this particular option is that it is completely hassle-free and quick to grab.
Are you someone who wants to know more about taking a loan against mutual funds? Then this article should be on your list of must-read write-ups. Moreover, in this article, we will even highlight a list of different situations when the loan could help you.
These will tell you when an investor can consider borrowing a loan on mutual funds. Hence, make sure you continue reading!
What is a loan on a mutual fund?
We all know that to acquire a loan, one needs to put up something like security or collateral. However, there are different types of investment options that can be used as security for generating money in India. One such option is a mutual fund.
This is where the concept of a loan on mutual fund started. But, it can only be offered by banks or financing institutions that are registered with mutual fund registrars.
Without this particular prerequisite, it is impossible for a financing firm to provide borrowers with a loan on mutual funds.
On the other hand, a loan on the mutual fund can also be generated pretty quickly.
Since a borrower has already put-up something as collateral, they can also find better loan against mutual fund interest rates. This gives borrowers an additional layer of flexibility and convenience.
With the help of digital platforms, one can apply for a loan on a mutual fund anytime. The entire application process can be conducted online, without having to visit the agencies’ office.
When to consider a loan on a mutual fund?
- Personal Use
A loan on the mutual fund can be considered when you want to generate money for personal use. This means whatever your requirement might be, you will be able to fulfil it with the help of this funding option. Moreover, due to the extensive funding limitation, you can deal with any type of expense.
- Business finance
Are you a businessman who is looking to raise finance to carry on with his/her organization’s operations? Then you may also benefit from a loan on a mutual fund. Besides, the amount that you receive as a loan purely depends on your mutual fund size. Thus, you will be able to deal with larger expenses easily.
- Medical treatments
Getting prepared for a medical emergency is not something that each one of us is careful. That is why we look for quick funding options when such a situation arises. This is yet another possibility for which you can consider a loan on a mutual fund. This financing option can be quickly utilized, which makes it ideal for fulfilling immediate requirements.
- Educational expenses
A borrower can also apply for a loan against mutual fund when they want to cater to educational expenses. These charges can be paid for any of your family members. What’s more, this financing service allows you to deal with expenses that are not directly related to higher education. It could be transportation, relocation, food and utilities and others.