In today’s fast-paced world, making smart choices is important. Technology is bringing solutions that were unimaginable few years back, and should be leveraged to improve quality of life. In this blog, we’ll discuss Volt Money, an app that offers loans against mutual funds, and why it could be a game-changer for individuals like us.
What is Volt Money?
Volt Money is a digital platform that provides loans against mutual funds. Unlike traditional personal loans with high interest rates, these allow individuals to leverage their mutual fund investments and get loans at very low interest rates. Here are the key details:
- Interest Rate: The interest rate is 10.5% (though they falsely advertise it at 9%). Your CIBIL score does not impact the interest rate.
- Credit Line: You receive a credit line against your pledged mutual funds. Pay interest only on amount withdrawn from this credit line, and repay principal as per your convenience.
How Volt Money Works
- Open a Credit Line: Pledge your mutual funds & get a credit line of 50% the pledged value. For example, if your mutual fund corpus is valued at ₹10,00,000, you’ll receive a credit line of ₹5,00,000.
- Quick Onboarding: The process takes just 15 minutes, requiring basic KYC, signatures, and pledging of mutual funds.
- Flexibility: Withdraw as much as you need and pay interest only on the amount withdrawn.
- Interest: Interest is calculated daily (at 10.5% per annum rate) & debited monthly.
- Repayment Options: Repay the loan principal anytime, from as short as 1 day to as long as three years
- Other Fee & Charges: There are no other hidden charges except from the rate of interest. No foreclosure charges. Complete details in charges section below.
Pros of Volt Money
- Speed: Loans are processed and credited to bank account within hours.
- User-Friendly App: The platform simplifies loan management with intuitive features for withdrawal, repayment, and tracking.
- Cost-Effective: There are no processing fees or foreclosure charges, apart from a ₹1,000 fee for pledging and unpledging mutual funds.
- Daily Interest Calculation: Pay interest only for the period you use the funds, making it an economical option for short-term needs.
Points to Consider
While Volt Money has several advantages, there are a few areas that could be improved:
- Misleading Interest Rates: The advertised rate of 9% is inaccurate; the actual rate is 10.5%.
- Customer Support: Though adequate, it lacks the proactiveness I have seen in financial platforms like Grip or Altgraaf.
- Interest Tracking: The app does not display the upcoming interest amount, requiring users to calculate it manually.
Who Should Use Volt Money?
Volt Money is an excellent option for:
- Young Investors: Those looking for quick, short-term loans without liquidating their mutual fund investments.
- Emergency Needs: Individuals needing immediate funds without lengthy paperwork.
- Flexible Borrowers: Those who can manage their repayments dynamically, benefiting from daily interest calculations.
- Far Better than Personal Loans: Personal loans come at a very high rate of interest. Individuals who are not careful with personal loans, end up in a debt trap. Loan against mutual funds are a great way to stay away from that vicious cycle.
A Smart Financial Strategy
Managing liquidity without disrupting investments is crucial. As per data, more than 50% of investor exit their mutual funds in under 2 years. A lot of this happens because they need funds. Exiting mutual funds for emergency results in people paying extra taxes while loosing out compounding gains.
Volt Money provides an innovative way to achieve this by allowing you to tap into your mutual funds without selling them. For short-term needs, these kind of loans offers an efficient and cost-effective solution compared to traditional personal loans. However, transparency and better user experience could make it even more appealing.
Conclusion
Volt Money exemplifies how technology is reshaping personal finance. It’s ideal for young professionals looking to balance smart investments with the flexibility of accessible funds. By leveraging mutual funds for loans, you retain your long-term investment potential while addressing short-term financial needs.
Have you used Volt Money or considered loans against mutual funds? Share your experiences or questions in the comments below. And if you found this blog helpful, don’t forget to share it with others interested in personal finance strategies!
This is not an investment recommendation. Its purpose is not to promote or demote any company or investment. Its purpose to share personal experience in unbiased form so other fellow investors can learn & take better informed decision for themselves. I am not a registered financial professional. For any investment advise, please take help from a registered Financial Professional.