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Using Non-Recourse Stock Loans to Pay Off Debt: What You Need To Know

January 04, 20243 min read

At some point, you may run into financial trouble and struggle to figure out your next move. You can borrow against the equity in your home or even an auto title. 

When it comes to finding cash fast, your options are plenty, as long as your credit is fair enough. Did you know you can take out stock-based loans? 

You can do this by taking out a non-recourse stock loan. These pose the least risk to a borrower who chooses to use stock investments as collateral.

Continue reading to find out more about non-recourse loans to pay off debt. 

What's at Stake? 

When you take out a stock-based loan, you put your investments up for collateral. These investments can be properties, stocks, bonds, and more. If you fail to repay your loans, the lender can seize your assets and sell them. 

The lender uses the proceeds to pay themselves back. 

With a recourse loan, you become personally liable for any debts owed. This means the lender can collect even beyond seizing your assets. 

Non-recourse loans work differently in this regard. The lender cannot go beyond seizing your assets if you default.

Using Stocks as Collateral 

Borrowing against the value of stock investments is much like borrowing against the equity in your home. The lender will often lend as much as 90% of the value of your stocks. In return, you pledge your stock holdings as collateral. 

The Benefits of Stock-Based Loans

Stock-based loans are a good option for those who possess significant wealth in their stock portfolio. Some lenders offer loans ranging from $50,000 to $5 million. Sometimes these loans come with few if any upfront fees. 

The biggest benefit of a stock-based loan? Many lenders don't require a credit check, meaning they won't run a credit report and damage your credit

Additionally, the lender takes on more risk than the borrower. This is because the value of the stocks could fall. The lender risks losing some or even all the money the borrower borrows. 

If you're able to pay back the loan, you'll recover ownership of your stocks. 

Beware, though, as stock-based loans may be considered transfers for tax purposes. This means you could pay taxes when you receive the proceeds of the loan or the lender sells the stocks. 

This fact allows lenders to sometimes charge higher interest rates and tougher terms. You should look for a lender who is willing to work with you on this. 

Get Stock-Based Loans to Pay Off Debt

Are you looking through your lending options trying to find the best one? Asset-backed loans are common, but some pose more risk to the borrower than others.

Don't put up your home for collateral. You can instead use the value of your stock holdings to secure a loan of up to $5 million!

With StockLoan Solutions, you can get loans to pay off debt quickly and easily with few fees and no credit check. To learn more about your options and how to get a loan from us, contact a loan specialist today.  

David

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