🔍 7 Common Myths About Loan Against Securities (LAS) Debunked

Summary: Loan Against Securities (LAS) offers quick, cost-effective funding without selling your investments—but many misconceptions persist. In this article, we debunk seven widespread myths to help you make informed borrowing decisions. 😊

Myth 1: Only Ultra-Wealthy Investors Can Use LAS 💰

Misconception: LAS is reserved for the richest clients, making it inaccessible to most investors.

Reality: Modern LAS products have become much more inclusive. Lenders base your loan on the value of your pledged portfolio, and minimum ticket sizes have fallen sharply. Today, even retail investors with modest portfolios can access LAS facilities at competitive terms.

Myth 2: LAS Takes Weeks to Get Funds ⏳

Misconception: The application and disbursal process for LAS is lengthy and cumbersome.

Reality: Thanks to digital onboarding, e-KYC, and real-time lien marking via CDSL/CAMS, many LAS lenders can approve and disburse loans in hours rather than weeks. Some fintech platforms now advertise sub-24-hour funding for qualified applicants.

Myth 3: You Lose Ownership & Dividends on Pledged Securities 🚫

Misconception: Pledging securities means giving up all ownership rights, including dividends and bonus issues.

Reality: When you pledge under LAS, the securities remain in your demat account; only a lien is marked. You continue to receive dividends, bonus shares, voting rights, and corporate actions. Your upside remains intact while you access liquidity.

Myth 4: LAS Hurts Your Credit Score 📉

Misconception: Defaulting on an LAS will badly damage your credit score, so it’s too risky.

Reality: LAS is a secured loan; timely interest and principal repayments are reported positively, similar to any collateralised loan. Only in cases of prolonged default do defaults get reported, but prudent borrowing and repayment alignment avoid this outcome.

Myth 5: LAS Products Are Overly Complex 📊

Misconception: LAS terms, margins, and pledge mechanics are too complex for ordinary investors.

Reality: Most lenders now offer transparent, standardized LAS schemes with clear Loan-to-Value (LTV) charts, simple interest-only overdrafts, and user-friendly online dashboards. Even first-time borrowers can complete the process easily through guided digital flows.

Myth 6: Your Collateral Will Be Re-Hypothecated Without Consent 🔄

Misconception: Lenders can re-pledge (rehypothecate) your securities for their own lending, exposing you to hidden risks.

Reality: In India, rehypothecation is strictly regulated. Lenders must obtain your explicit consent in writing and are capped on reuse limits. Most retail LAS offerings do not involve further pledging of your collateral—your securities remain earmarked exclusively for your loan.

Myth 7: LAS Is Expensive Compared to Other Loans 💸

Misconception: LAS carries higher rates and hidden fees, making it costlier than personal loans or credit cards.

Reality: LAS rates are often lower than unsecured personal loans because of the collateral cushion. Processing fees are minimal, and many lenders offer fee waivers for digital applications. When you compare the all-in cost (interest + fees), LAS typically undercuts unsecured alternatives.

✅ Conclusion

Don’t let myths deter you from leveraging Loan Against Securities for quick, low-cost liquidity. By understanding the true mechanics—ownership retention, swift digital processing, regulated rehypothecation, and competitive rates—you can confidently use LAS to meet your financial goals without selling your investments. 🌟

🔍 7 Common Myths About Loan Against Securities (LAS) Debunked

Myth 1: Only Ultra-Wealthy Investors Can Use LAS 💰

Myth 2: LAS Takes Weeks to Get Funds ⏳

Myth 3: You Lose Ownership & Dividends on Pledged Securities 🚫

Myth 4: LAS Hurts Your Credit Score 📉

Myth 5: LAS Products Are Overly Complex 📊

Myth 6: Your Collateral Will Be Re-Hypothecated Without Consent 🔄

Myth 7: LAS Is Expensive Compared to Other Loans 💸

✅ Conclusion

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