Loan against MF

A loan against mutual funds is a financial product that allows investors to borrow money from banks or non-banking financial companies (NBFCs) using their mutual fund holdings as collateral. This option provides liquidity to investors without the need to sell their mutual fund units, thereby allowing them to remain invested for long-term growth. One of the main advantages of a loan against mutual funds is liquidity. It provides immediate access to cash without disrupting long-term investment plans. The flexibility of this financial product means that it can be used for various purposes, such as funding emergencies, education, or catering to urgent financial needs, while still benefiting from the potential market appreciation of mutual fund investments. Overall, a loan against mutual funds is an attractive option for investors seeking quick access to funds while maintaining their investment strategy.

Term Loan

A term loan against mutual funds is a type of secured loan where investors can borrow money from a bank or financial institution by pledging their mutual fund units as collateral. Instead of redeeming their investments, investors can unlock liquidity while still retaining ownership of their mutual fund portfolio. The borrowed amount depends on the Net Asset Value (NAV) and type of mutual funds pledged. Typically, lenders allow borrowing up to 50–70% of equity mutual fund value and 70–80% of debt mutual fund value. The loan amount is credited directly to the borrower’s account, and the pledged units remain in a lien with the lender until repayment.

Over Draft / Flexi Loan

An Overdraft (OD) or Flexi Loan against mutual funds is a borrowing facility where investors pledge their mutual fund units as collateral and get access to a pre-approved credit limit. Unlike a term loan, where the borrower receives a fixed lump sum, an overdraft provides flexible withdrawal and repayment options—you can borrow, repay, and re-borrow within the sanctioned limit, as per your needs. The biggest advantage is that interest is charged only on the amount utilized, not on the entire approved limit. For example, if you have a sanctioned OD limit of ₹5,00,000 but use only ₹1,00,000, interest is payable only on that ₹1,00,000. This makes it a cost-efficient borrowing option for managing short-term or recurring financial needs.

Consumer Loan

A consumer loan is a type of financing solution offered to individuals, usually at the point of sale (POS), to help them purchase goods or services without paying the full amount upfront. These loans are commonly used for buying electronics, appliances, furniture, travel packages, education services, or healthcare needs. Instead of delaying the purchase, consumers can own or use the product immediately and pay for it gradually in fixed installments. Consumer loans typically come with fixed interest rates and predefined repayment terms, making it easier for borrowers to plan their monthly budget. In many cases, lenders partner with retailers, e-commerce platforms, or service providers to offer instant approval and paperless disbursal at the time of purchase.