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Need loan? You can fall back on your mutual fund

You can use your mutual fund units to take a loan from banks or non-banking financial companies. First, check whether your mutual fund scheme is among the lender’s approved list of schemes. Usually, you get a bigger loan on debt schemes since these are less volatile than equity schemes. Different lenders offer different interest rates, depending on the scheme, the loan tenure and the borrower’s credit score. The rates can be between 10%-12%. Opt for this loan only when you are sure that your cash crunch is going to be temporary since the lender has the right to sell your units, if you don’t meet your debt obligations.

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