How To Borrow a Personal Loan With No Paperwork?
Key takeaways
- While personal loans are popular, they are not as secure as loans against mutual funds. On the other hand, when you borrow loans against your mutual fund units, you use them as collateral, adding security to the arrangement.
- Getting loans against mutual funds requires zero paperwork, making it a stress-free solution for temporary cash-strapped situations.
- Loans against mutual funds are ideal for meeting short-term needs without ending long-term investments.
- Investors opt for loans against mutual funds for their affordable interest rates.
No matter what kind of application you’re trying to fill, it’s almost a universal fact that physical paperwork is one of the most daunting things.
The same goes for every loan application you’re trying to fill as well.
Whether it is to cover unexpected medical bills or to reimburse high-interest debts – personal loans are becoming increasingly popular in India.
What gives personal loans an edge over other types of loans is how quickly the amount gets disbursed into your bank account with little to no paperwork.
But what type of personal loan is actually ideal for you?
Let’s find out.
Loan Against Mutual Funds – A Seamless Borrowing Experience With No Paperwork
Personal loans are extremely convenient and easily accessible; you can get them approved within 48 hours from any bank or non-banking financial institution.
Although banks remain the top choice as money lenders with 77% favorable votes, about 14% of people pivot towards non-banking financial institutions.
And because they are so easily available, 67% of Indians have opted to take a loan at least once in their lifetime.
The one problem, however, that most people face with personal loans is the lack of security that comes with them.
But there’s a way to counter this disability – instead of applying for a traditional loan, you can apply for a loan against mutual funds.
Getting a loan against mutual funds is safe and easy because you use your investments as collateral.
This option leaves your long-term investments untouched while meeting temporary cash-strapped situations.
And the best thing about mutual fund loans is that the entire process is digital. This means that you don’t have to spend hours doing physical paperwork.
9 Reasons Why Borrowing Loan Against Mutual Funds Is In Your Best Interest
As of June 2024, the total value of loans in India escalated to 17.40%, cementing their popularity in the region.
While traditional loans are common, loans against mutual funds have an upper hand due to lower interest rates.
Today, you can get LAMFs within the range of Rs 50,000 and Rs 5 crore in less than a day, making it harder to deny their importance.
No loan is good or bad.
But every loan has a unique set of characteristics that make them more suitable for your needs.
Here’s what mutual fund loans have to offer:
1. Quick applications
One of the best features of mutual fund loans is that submitting your application is the fastest thing ever.
With 50Fin, all you have to do is download the application, sign up with your details, and seek approval for your application.
An important thing to know is that your loan application review takes just 7 minutes or less.
Along with that, the disbursement of funds also happens in just 4 working hours.
Recommended: How to borrow a loan against mutual funds online?
2. Affordable Interest Rates
The current interest rate on loans against mutual funds is between 10% and 13.5% per annum.
On the other hand, the interest rate on credit cards could go as high as 40.80% per annum.
Comparing the two can help you see why loans against mutual funds are affordable and more user-friendly for people seeking loans.
Another important consideration is that interest is only applied to the amount you use, not the entire amount disbursed into your account.
3. Ideal For Meeting Short-Term Needs
Getting a loan against your mutual funds allows you to handle temporary cash-strapped situations.
For example, 36% of Indians take a personal loan to renovate their homes and 9% choose this option to finance a vacation.
Does that mean they liquidate their investments to meet current needs?
Absolutely not.
By pledging a loan against mutual funds you can get access to instant funds without selling your mutual fund units.
This way your investments remain intact while you meet short-term requirements, using your investments as collateral.
4. Tax-Efficient
Loans against mutual funds are known for being tax-efficient.
For example, Section 80C of the Income Tax Act lets you claim a tax deduction of up to INR 1.5 lakh.
In addition, the ELSS (equity-linked savings scheme) saves you about 46,800 INR per annum.
And there are a bunch of retirement savings schemes as well.
5. Lien For Mutual Funds
When you borrow a loan against your mutual funds, the lender will place a lien on them.
This gives them the legal right to claim those units in case the borrower fails to repay the loan.
Also, this way you can find out the actual value of your mutual fund assets without selling them.
6. Flexible Repayment Schedule
Loans against mutual funds are convenient for various reasons.
The top reason has to be its flexible repayment schedules.
Both the borrower and lender get to decide the terms and conditions of mutual fund loans, making an ideal option for both you and your lender.
7. Zero Foreclosure Charges
This is a little-known fact but there are no foreclosure charges if you clear your outstanding debt early.
So there’s no need to worry about any hidden, lock-in charges.
8. Security
Borrowing loans against mutual funds is a safer option compared to traditional personal loans.
Here, you use your mutual fund assets as collateral, a reassurance that the loan will be repaid as per the commitment.
This makes the entire process transparent and secure.
9. Long-Term Investments Remain Intact
Meeting temporary cash-strapped situations doesn’t mean terminating long-term investments.
Thus, borrowing loans against mutual funds is a common way for investors to meet immediate but temporary financial needs without dissolving their long-term plans.
This option allows you to continue leveraging profit from your investments and benefit from possible growth in asset value.
Why Do Investors Opt For A Loan Against Mutual Funds?
For starters, mutual fund loans let borrowers access funds without liquidating their investments.
Secondly, it doesn’t affect their credit score.
And thirdly, it allows them to discover new markets to diversify their portfolio.
But there are deeper reasons than these plain-sighted benefits.
Here are some of the common reasons why investors borrow loans against mutual funds:
1. To Pay Debts
Many investors borrow loans against mutual funds to pay debts with higher interest rates, for example, home loans or credit card loans.
This doesn’t make you interest-free, but a loan against a mutual fund lets you relax through affordable and flexible repayment plans.
2. To Support Their Education
Many students take personal loans to support their education and professional education.
However, getting a loan against a mutual fund has more benefits than traditional lending options.
3. To Expand Their Business
Many small business owners borrow loans against mutual funds to support their growing business needs without breaking their long-term investments.
4. To Meet Unexpected Crisis
Another common reason for borrowing loans against mutual funds is to tackle unexpected financial crises.
Whether it is to handle a medical emergency or to repair your damaged car, this loan allows you to access funds without ending your investment.
Getting A Personal Loan Against Mutual Funds – Final Thoughts
While the reason for borrowing a personal loan against mutual funds is different for everyone, the benefits are the same.
- lower interest rates
- flexible payment schedules
- quick approval and disbursement of funds
- no foreclosure charges
With 50Fin, you can get a loan against mutual funds with zero paperwork to handle unexpected financial requirements.
We offer mutual fund loans at 10.5% p.a. – along with making sure your loan approval process happens in under 7 minutes.
Sign up now to check your eligibility.
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- No Minimum CIBIL Required
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