LAS Interest Rates Explained: 7 Key Factors That Determine Your Rate

Summary: Thinking about taking a Loan Against Securities (LAS)? Understanding what drives the interest rate can help you get the best deal. In this post, we break down the top seven factors—from collateral quality to market conditions—that lenders use to set your LAS rate. 🚀

1. 🔐 Type & Quality of Collateral

The most important driver of your LAS rate is the nature of the securities you pledge. Blue-chip shares and high-rating debt instruments are viewed as lower risk, so they typically attract lower interest rates compared to volatile mid-cap stocks or lower-rated bonds. Always check your lender’s “approved securities” list before pledging. 📋

2. 📊 Loan-to-Value (LTV) Ratio

The LTV ratio—the percentage of your collateral’s market value that you borrow—affects pricing. A lower LTV (e.g., 30–40%) gives the bank a larger cushion against price swings, resulting in a more competitive rate. If you max out the LTV (often capped at 50–70%), expect a slightly higher rate. 💹

3. 🕒 Loan Tenure & Repayment Structure

Shorter-term LAS loans (3–6 months) generally carry lower rates because lenders assume less risk over a brief period. Longer tenures (up to 12 months or more) may incur a small rate premium. Opt for an interest-only overdraft facility if you prefer paying interest monthly and principal at maturity. ⏳

4. 🏦 Borrower’s Credit Profile

Even though LAS is secured, many lenders review your credit history. A high credit score (750+) can earn you a discount on the base rate, while a blemished record may lead to rate mark-ups. Keep your credit utilization and repayment history pristine. ✅

5. 📈 Market Interest Rate Benchmarks

Most banks peg LAS rates to an internal benchmark—often the repo rate or MCLR (Marginal Cost of Funds based Lending Rate). When the RBI adjusts policy rates, your LAS rate might reset accordingly. Staying aware of central bank moves can help you time your borrowing. 📉📈

6. 🤝 Lender Competition & Relationship

Competition between banks and NBFCs can work in your favor. If you hold a salary or savings account with a lender, you may qualify for relationship discounts or negotiated rate cuts. Always ask your bank for a “relationship rate” if you have multiple products with them. 🏦

7. ⚖️ Processing Fees & Other Charges

While not strictly an interest rate factor, processing fees, renewal fees, and documentation charges add to your overall cost of borrowing. A low headline rate may be offset by high upfront fees—so compute the “all-in” cost before signing. 🧾

📌 Pro Tips to Lower Your LAS Rate

• 👍 Maintain a diversified, blue-chip heavy collateral basket.
• 📉 Aim for an LTV below your lender’s maximum.
• ⭐ Leverage a high credit score and clean repayment record.
• 🤝 Negotiate relationship discounts based on existing banking products.
• 🔍 Compare offers from multiple banks and NBFCs before deciding.

✅ Conclusion

Your LAS interest rate is a function of both market forces and personal financial profile. By understanding these seven factors—collateral type, LTV, tenure, credit score, benchmarks, relationships, and fees—you can negotiate a better rate and unlock liquidity without sacrificing returns. Ready to explore your options?
Apply now at InvestoEdge! ✨