How to Get Started with Stock Loans

Have you ever wondered what stock loans are? Don’t worry, you are not alone.
Stock loans are an excellent alternative to margin accounts. It allows investors to use stocks as collateral for loans, which can then be used to trade. The interest rate on stock loans is usually lower than rates for margin accounts, and the borrower doesn't have to pay any commissions.

One of the most attractive characteristics of stock loans, however, is that they are generally non-recourse, meaning that in the event the stock value decreases, the lender cannot force the borrower to sell the shares or any other assets. As a result, stock loans are becoming increasingly popular among high-net-worth individuals.
To get started with stock loans (also known as equity-based lending or stock-based financing), you’ll need to:

1. Determine Your Stock Loan Eligibility
2. Select a Stock Loan Provider
3. Apply and Get Approved
4. Choose Your Stock
5. Lend Your Stock
6. Receive Cash
7. Sell Your Stock vs. Repay Loan
8. Make Your Stock Loan Work for You

Usually, a non-recourse stock loan is a long-term loan (3 years or more). If you make regular cash payments on time, you will get your stock back at the end of the loan period, plus any proportional interest.

August 23th, 2021

Author: Julia Shareiko
Photo: Unspalsh