Share Loans

[whatsup]

@ Everyone

Can you please help me out by letting me know:

Which banks offer a share loan to purchase any type of shares ie; IPO, PO & secondary market. Do you have to bank with the institution?

If you have a nominee account, can your stockbroker raise the loan on your behalf?

Thank you for your enlightening answers

[richestowealth]

I only know of UBA because I'm using them to purchase First Bank. They have lists of stocks you could buy from. No IPOs, penny or UBA stock. For UBA you need to open an account with them which they'd do together with the Share loan purchase application. The minimum you could borrow is
N500,000 @ 17% for a year. You'd also have to pony up 40% of whatever the value of the shares you're buying.

[pesadilla]

caution on the so called uba share plus loan,read the contract very well.
looks more like a trap.

[richestowealth]

Why do you say that?

Originally Posted by pesadilla

caution on the so called uba share plus loan,read the contract very well.
looks more like a trap.

[pesadilla]

the loan has intrest of 17%,2% to be paid upfront.you are not allowed to trade freely,no penny stocks,no ipos,the banks appoints there brokers who buys and sells the stocks on your behalf.they are allowed a total sale off if the stocks they ve chosen for u drops below 20% to recover there money.
it designed to be a one sided deal.remember u have to drop 40% of the amount u want to borrow.

[Geeman]

Well, most loans are like that. The borrower is always in a weaker position and the bank does everything possible to secure its money. If there are other alternatives, it should not be touched even with a long pole. If there are not, then you bite the bullet and hope for the best.

[Taipan]

Originally Posted by pesadilla

caution on the so called uba share plus loan,read the contract very well.
looks more like a trap.

Wondering whats going through your mind. The first thing you must understand in life is that you cant have it 100% to your advantage. And when it comes to money esp, the way to wealth is "U chop, I chop. Everybody's happy!"
What the UBA loan exactly offers is this: the power of magnification. You have a N100,000 to invest? come to us and we'll make it N250,000. Of cos, you don't get such offers without a price - the 19% interest/annum (total). Infact, if you're offered such free, you should run cos that will be THE TRAP!
Believe me, if you cant give, you cant take. And if you cant take little risks, how can you make great profits?
The beauty of the loan also includes the fact that you can pay as you wish e.g. monthly, one-time etc Of cos, they'll sell the shares if the value drops. If you dont want to loose your money, what makes you think they want to loose theirs (which doesnt belong to them in the first place)?
But only take as loan what you can raise in the time-frame of the loan i.e. if all you can save in a year is N100,000, then dont take a 1-year loan that exceeds N100,000... at least in this kind of situation.

[dotunk]

Taipan

i agree with you totally.

i dont believe one should take a loan they cant service.

[pesadilla]

actually to be able to service the loan thats why the bank has to give you a free hand to buy and trade your stock.while implementing other means inorder not to loose there money.what happens if the appointed brokers buys none performing stocks for u ?.remember they have nothing to loose. its left for each person to decide whether to take the loan or not.i only said caution must be the watch-word,personal i will not take a loan that i cant trade on freely.its 19% intrest,but you will be fighting agaisnt a total cost of up to 26% thats including other fees.

[Avocado]

According to UBA documents, the minimum you could borrow on the UBA loan is N500,000; someone correct if that isn't right. That means you have to drop N333,333. 19% p.a. isn't the total you have to pay as pesadilla noted. Read the contract, and read it again, and again. There're holes in there, all in favour of UBA. This, in my not-so-humble opinion, is a bind. Correct, the lender plays the tune in the relationship, but this is just beyond the pale.

After getting the security of being able to liquidate your stocks below a certain limit, UBA restricts your being able to trade freely (the stocks list is fine). In our questions on this deal, two UBA officers couldn't give consistent answers to the same question. And there's the tiny issue of a 1.0% NSE fee (NSE charges 0.6%, as reported by all the other stockbrokers).

One isn't sure the price is up to 26%, but it should be close, all things considered. If you don't already bank with UBA, you've to open a current account; you need to keep a tab on small charges, etc. Not as good a deal as originally touted.

.

[c kenneths]

While appreciating the contribution of everyone on this thread, i will only advice that we look well before attempting a leap, share purchase loans and other loans are great while things are moving smoothly but a disaster when things go wrongly.

I wont touch these loans even with a long pole, I prefare to start small and work my way to the top, with my own money. Even if it only N10,000.00.

But thats my own opinion, maybe its because am a control freak, like to make my own rules not any bank telling me when to buy, what to buy and all that.

Some of the guys directing your buy or sell decisions may be worse analysts than you but you will be obliged to do their bidding, just because they gave you a loan.

Like i said its only a personal opinion, if you want to live with their conditions good luck !

[bwalaman]

Agree, totally with C Ken... this is a double whammy!!!
Good luck indeed !!!

[dotunk]

c kenneths you are right.

i prefer that mode. more so when we all start there isnt much experience so getting a loan to get shares is just not worth it except you pay the money back immediatly and not over a period.

the conditions attached to these loans by banks is really not fair. how can i get a loan to buy shares and it the same creditor that dictates what shares to buy and when to sell.

i advocate starting small... thats what i did. i started with just N4 (buying 100 units of Allied bank) and the N1,100 for Afribank and N2k for First bank and so on and these ahve grown into big money.

this is what i advice any new investor to do.

[Taipan]

Originally Posted by pesadilla

actually to be able to service the loan thats why the bank has to give you a free hand to buy and trade your stock.while implementing other means inorder not to loose there money.what happens if the appointed brokers buys none performing stocks for u ?.remember they have nothing to loose. its left for each person to decide whether to take the loan or not.i only said caution must be the watch-word,personal i will not take a loan that i cant trade on freely.its 19% intrest,but you will be fighting agaisnt a total cost of up to 26% thats including other fees.

First of all, the actual interest rate is 17% making the total 19% when other fees are added. I know because I was at their office and went through the documents.
Secondly, nobody chooses stocks for you. Of cos, there's an approved list of stocks but that's only reasonable. The bank wants to be sure that whatever company you're investing in wont loose investors and depositors money. It's also a protection for you so you dont squander he money on the latest tips.
Thirdly, the bank is only allowed to sell of stocks if the value drops below 20% of the purchase price. They cant just buy and sell on a whim.
Now it is very easy to look at rich men and mega corporations and complain that the rich are getting richer. Forgive me, but the reason why the rich get richer and the poor, poorer is found in your mindsets. The richman sees a little opportunity and takes the risk and once in a while he succeeds. The poor sees a big opportunity and little risk, and guess what, he runs away! Thats what we all are doing. Chect the balance sheets of all the rich and big coys you know, you'll find out that they are built on loans! Donald Trump, America's Real Estate mogul once owed $2b (N260b)! Same for Adenuga in building Glo and so on. Dangote just took a N60b facility. Tinapa has over N30b in loans!
... well its left to you. I'v taken it and when I make my profit, I'll let you know. If I lose, when I recover... I'l take another!!!

[dotunk]

Taipan,

what is said is that one should take a loan basd on his experiences and ability to pay back cos you are supposed to end up better than you started out. if this turns out bad one could not recover from it.

the rich guys you talked about started from somewhere with little money and have gotten experience over the years and can ask for seriuos amount of money to do business.

the N60bil you said Dangote took as loan, are you saying he doesnt have N60bil to pay back if had to pay back in a hurry... am sure he has. but if one took a loan of N1million, does that person have that kind of money?

if you have it good for you and all this talk will not be necessary.

[eriksbmw]

You guys should all be objective in your analysis......taking loans to buy shares is a great means of wealth creation.

Look at the market....some stocks have moved over 600% from the beginning of '07.If you had taken a margin facility to by stock @ 21%/annum can you see where you will be today if you sell ?

The institutions do not dictate which shares to buy ( at least in my case )...they advise and execute your instructions.

I have over 4 margin facilities running and to date I had multiplied the principal amount I borrowed over 5 times.....i.e. for example if I had borrowed 1million I would now have a portfolio worth 5million.

Though I'm in a position now to pay back the funds I won't ......I will continue to invest their money, along with mine, to create even greater wealth.

I do a lot of research myself and have found that I pays off.....if you can manage your portfolio and you are ready to devote yourself to hard work....by all means take a loan....if you need any tips I will even help !

If not invest in a mutual fund and watch them make over 400%/annum and pay you 70% !

[ghm]

Great Contributions. I took a 23% margin in January (I remembered mentioning it here) and I am glad I did today, I have already made more than 40% and already done some trading some sales to lock in some of them.

My interest now is what types of stocks do you see in the next 2 quarters will be good for a margin facility?