Importance of Stock Loans
Loans are essential because we use them when we urgently need cash. Loans can also be used to expand the business or to build a house. With the continued development of technology there has been an increase in the number of options an individual can use to access loan funding. Unlike in the past where loans could only be accessed in banks and other lending institutions, nowadays stock investors have another viable option they can use to get a loan. The amount you will receive for the stock loan will be determined by the price of your shares, the number of shares and the volatility of the security.
It is important to note that stock loans only need your shares as the collateral there is no need to pledge personal property or asset. The amount of the loan you qualify for will be determined by the value of your stocks. The stocks will be given back to you once you finish payments. It is important to note that stock loans allow investors to have access to loans that are reliable, safe and completely confidential. There are many advantages of stock loan apart from the ones stated above. This article, therefore, explains some of the advantages of the stock loan over other loan alternatives.
The first benefit of stock loan is that it has one hundred percent limited recourse transaction. It is important to note that stock loans provide an individual with an opportunity to walk away from the loan at any time without affecting their general credit ratings because the lender will just seize the shares. Stock loans do not interfere with your credit score and there is no personal guarantee required apart from using shares as collateral.
The second benefit of stock over other loan types is that is processed quickly. The bank and other financial lending companies take several months before approving your loan request because they need to verify a lot of information. On the other hand when you apply for a stock loan, it is normally processed quickly within seven days you will have the money in your account. With stock loan there is no need for a credit report and credit review because the only collateral required is the stocks. Since you have the freedom of walking away from the loan at any time without affecting your credit score and the fast cash availability many investors like stock loans as opposed to bank loans.
The third advantage of stock loan is that it is flexible compared to other types of loan. When applying for a bank loan, you need to have a business plan with details on how you are going to use the loan amount.