The Founder and CEO of Equities First Holdings Explains Margin Loans verse Stock-Based Loans
The Founder and CEO of Equities First Holdings Al Christy, Jr.- says conventional has different rates also, that the loan-to-value ratio ranges from 10 to 50 percent and anything above this, could mean the lender stands at a liquidation risk. Mr. Christy, further explains the variance amid margin loans and stock-based loans; saying a borrower has to be prequalified before getting a conventional loan and when approved, the money borrowed can only be used for the specific purpose it was meant for.
He said in the case of stock-based loans, the interest rate ranges from 3 and 4 percent and that loan-to-value ratios vary from 50 to 75 percent; it is “non-recourse” the borrower does not have to use the money for a particular purpose and therefore can decide to opt out of their borrowed loans without having to pay outstanding interest even when their collateral value has reduced.
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