Today, loans are easier to acquire than ever before in history.
We have numerous loan products at our disposal, but one most people have a hard time understanding is loans against shares. This is because of the scanty resources available that explain what shares are, how loans against shares work, and the benefits of getting this type of loan.
To try to demystify and provide accurate and easy to understand information, I sat down with Johnstone Mwombe from Ngao Credit Limited.
Who is Johnstone?
Johnstone has an extensive background in the shares industry. Having worked at CDSC and other Investment Banks in Kenya for a period spanning over 13 years. He has been actively involved in development of systems and process relating to Equities & bond trading.
He is passionate about enabling existing and potential investors to have a wholistic & transparent experience on their equities/shares investment.
Here are some of Johnstone’s responses to the questions I asked him:
What are shares?
A share is a unit of ownership of a company.
It’s a form of investment where, the holder anticipates long-term returns from share of profits (dividends) and capital gains (when market price significantly raises compared to your buying price).
How does a loan against shares securities work?
As an owner of shares of a company listed on the Nairobi Stocks Exchange, you have an underutilized asset.
Financial institution accepts NSE listed shares as a collateral to grant a loan based on their market value. While your portfolio remains intact, you can access this facility to grow other investments, enhance your business and/or cover an emergency.
How do I get a loan against shares without dipping into my savings or liquidating my assets?
To get a loan without dipping into your savings and investments, all you need to do is pledge your shares.
What this means is your shares will be frozen by the Central Depository & Settlement Corporation Limited (CDSC) and in favor of this the financial institution who in turn shall advance you loan. All this happens without the need of selling your shares.
What are the benefits of taking a loan against your registered NSE shares? Do I still enjoy the dividend?
One key benefit loan against shares provides is growing your portfolio and still access funds concurrently.
With this flexibility of growing your portfolio, you will have access to additional cash to invest in other opportunities.
You not only get to enjoy 100% of dividends due to the frozen shares, but also remain entitled to other corporate actions like rights & offer for sale issues, bonuses and splits issues.
What is the interest rate and repayment plan for loans against shares?
We offer up to 60% value of your registered NSE shares. With an interest rate as low as 4% you get to enjoy a flexible repayment period of up to 12 months.
This way you get to choose what works best with your situation.
What is the turnaround time for one to get a loan against shares?
At Ngao Credit, we have managed to reduce the traditional turnaround time of 5 days to just 1-2 hours for you to access your funds.
What documents do I need to prepare before applying for a loan against my shares?
All you need to do is walk into any of our branches and provide the following:
- Identification Card or valid passport
- Have NSE registered shares on your CDS account
- Latest 6 months bank statements
Our staff shall be in position to verify availability of the shares & review the documents within few minutes and initiate the process of disbursing the loan. This process should take a maximum of 2 hours after which you will have access to your funds.
Where do I find you?
Call our customer care person via 0709 650 000 or dial *725#. You can also visit our website to learn more about this product.
There you have it folks!
If you’re looking to acquire a loan and have listed NSE shares, you can easily get up to 60% their value in just 2 hours. Contact us for more information.