Volt Money Loan Against Mutual Fund (LAMF) product offers an innovative and flexible solution, allowing investor to leverage their mutual fund investments without selling them. In this article, we will review the Volt Money Loan Against Mutual Fund service, exploring its features, benefits, and potential considerations for users.
Key Features:
- Easy Online Process:
Volt Money's platform provides a hassle-free online application process, eliminating the need for extensive paperwork and long processing times. Users can conveniently apply for a loan against their mutual funds from the comfort of their homes. - Instant Loan Disbursement:
One of the standout features of Volt Money's LAMF service is its quick loan disbursement process. Upon approval, borrowers can expect funds to be credited to their accounts promptly, enabling them to address their financial needs without delays. - No Credit Checks:
If the value of the collateral you are offering is greater than the loan amount requested, there is no need for a credit check. Secured loans are generally considered low risk in such cases. - Competitive Interest Rates:
Volt Money offers competitive interest rates on its Loan Against Mutual Fund product, making it a cost-effective alternative to other forms of borrowing. - Flexible Repayment Options:
Borrowers can choose from various tenure options to suit their financial capabilities and can repay the loan through convenient EMIs (Equated Monthly Installments).
Benefits:
- Retention of Mutual Fund Investments:
Perhaps the most significant advantage of availing a Loan Against Mutual Fund is that investor can retain their long-term investments and continue to benefit from potential market growth. - Lower Interest Costs:
Compared to traditional loans and credit cards, which often come with higher interest rates, Volt Money's LAMF offers more favorable terms. - Quick Access to Funds:
In times of urgent financial requirements, Volt Money's LAMF provides a swift solution. - No Prepayment Charges:
Volt Money's Loan Against Mutual Fund typically does not carry prepayment charges. This means borrowers can choose to repay the loan ahead of schedule without incurring additional costs, potentially reducing the overall interest burden.
Disadvantage
- Risk of Margin Calls:
While pledging mutual fund units as collateral can be advantageous, borrowers must be mindful of market fluctuations. If the value of the mutual fund units drops significantly, the borrower may face a margin call, requiring additional collateral or loan repayment. - Potential Impact on Investment Returns:
Using LAMF may impact the overall returns of the mutual fund investment. Borrowers should carefully assess the cost of borrowing against potential returns on the mutual fund units before availing the loan. - Loan Eligibility Criteria:
While Volt Money's Loan Against Mutual Fund may not require a credit check, borrowers must meet specific eligibility criteria, including minimum investment tenure, mutual fund type, and scheme selection.
Conclusion:
Volt Money's Loan Against Mutual Fund is an attractive financial product that offers convenience, flexibility, and quick access to funds without the need to liquidate mutual fund investments.
It is essential to maintain a margin of safety in case of a market downturn. If the market falls and you are unable to pay the required margin amount, the company may liquidate your mutual fund units.
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If your mutual fund units have already generated a return of greater than 12 percent, selling them could be a favorable option. Capital gains of up to one lakh are tax-free, which is an added advantage. However, you might be hesitant to pay taxes. In such a situation, you need to consider the potential scenario of your investment valuation dropping. In such a case, you may have to choose between paying taxes on your gains or accepting the losses incurred.
In the current bullish market, it may not be advisable to take out a loan. However, during a market downturn, taking a loan against your investments could be a more viable option.