Stock loans are offered by an independent lender who agrees to take your stock as security for the loan with the idea being that you get your stock back after you finish paying the loan together with all the interests you agreed to pay at the end of a particular period. The lenders who give such loans do not work according to the interest rates and the regulations put in place by the bodies governing commercial lenders such as banks because they are usually individuals who are out to make money from the many customers who just want to get quick loans for emergencies they might be facing in life.
There are benefits of getting loans through the stock loan lenders as opposed to going through the banks. The first importance is that your credit score does not come under scrutiny when you want to take such a loan because the credit report is not a factor that can influence the outcome of the loan application request since they only check the value of the stock you want to give up. What this translates to is that you will always be able to get the loan you desire even with a bad credit score as long as you have enough stock to act as security for the loan.
The second advantage is that defaulting on paying a stock loan will not result in any damage to your credit score because the loan is not in official records and the lender cannot report you to credit organizations. The solution for the lender when you fail to repay the loan and interests as agreed is that they auction your stocks at the value it attracts from the market before getting their money from what is made.
Another thing to note is that getting a loan from stock loan lenders saves you a lot of time due to the fact that they are not actually concerned about being shown such as credit reports and you therefore get a loan approved fast. Getting a loan from such lenders is a good thing when there is an emergency.
The next advantage is that getting the stock loan puts you in a position of acquiring liquidity when you have your stock in the lenders hands but you retain all the rights to get it again when you feel that you have enough money to keep it up. Lastly, you will also benefit from the good interest rates and flexible loan terms that are offered by such lenders so that you do not have to struggle with high rates from the normal lenders such as banks.