To build a bigger corpus in the long run Mutual funds are considered to be an effective investment tool. mutual fund There are many benefits of investing in. This gives you attractive returns in the stock market but without the headache of the stock market. mutual fund It is not only the best investment tool but also helps in getting instant loan when you need money. today we of mutual funds You will know some important things about the instant loan available through.
What is Mutual Fund Instant Loan?
Instant Loan on Mutual Funds is a way of getting instant loan by giving your mutual fund units as collateral. These types of instant loans are offered by many NBFCs as well as banks. The amount available in this type of loan depends on the current value of your mutual fund portfolio. If you have an equity based mutual fund unit, you will get comparatively less money as loan. But if you have a debt based mutual fund unit then you can get more loan. Let us now know about some of the major advantages and disadvantages of instant loans available on mutual funds.
Mutual Fund Loan: Benefits
The process of getting instant loan on mutual fund units is very fast. There is not much paperwork involved and considering the current value of your portfolio, it gets approved quickly and you get the loan amount quickly too. You retain ownership of your mutual fund units that you have pledged for the loan and you also get the dividends and interest earned on them. In this, you can ask for time to repay the loan amount as per your convenience. In this type of loan, you have to pay less interest as compared to personal loan.
Mutual Fund Loan: Disadvantages
The value of a mutual fund portfolio entirely depends on fluctuations in the stock market. If the market experiences a prolonged decline, the value of your portfolio may also decline and the loan-to-value ratio may also be adversely affected. Additionally, the bank can liquidate the mutual fund units pledged by you to recover the loan in case of default.
