Securities-Backed Lending
Address Your Financial Needs Through Securities-Backed Lines & Letters of Credit
Whether you need cash to purchase a new car, pay for a child's education or pay for some repairs on your home, you don't have to go to the bank to take out a loan or sell your investments and risk incurring capital gains taxes and disrupting your investment portfolio. Instead, you can take advantage of the securities-backed lending options available through our affiliates.Securities-backed lending lets you borrow money using your eligible investments as collateral. Funds you borrow through this program can be used toward practically any purchase.1 As long as you have enough marketable securities in your account to use as collateral, leveraging your investments in this manner can be easier and more cost-effective than your other alternatives.2
Personal Lines of Credit to Meet Your Specific Needs
Through our affiliates, we offer three different types of personal lines of credit and a letter of credit option that can be used for various needs:
Asset Advantage Line of Credit
The Asset Advantage Line of Credit3 is a versatile, easy-to-open line of credit that provides:
- Access to the funds you need at competitive rates
- Borrowing power from $100,000 to $2 million (up to 60% of the value of your eligible assets)
- No setup or maintenance fees provided your assets are not in an irrevocable trust
- Access to funds within days
- Monthly interest-only payments
- No prepayment penalty
Custom Line of Credit
With a Custom Line of Credit,3 you can use the money you borrow to pursue personal or professional goals while continuing to hold and trade pledged securities.1 Benefits include:
- More borrowing power than our Asset Advantage Line of Credit
- Access to more than $2 million -- up to 95% of the value of your eligible assets -- without liquidating those assets
- Competitive rates that decrease as loan values increase
- No setup fees provided your assets are not in an irrevocable trust
- Ability to access funds through wire transfers and renew your line of credit regularly
- Monthly interest-only payments
Command Credit Line3
The Command Credit Line is available through our Command Asset Program for both purpose and nonpurpose lending, which means the money you borrow can be used to purchase or trade securities as well as meet other short-term cash needs. Benefits include:
- Opportunity to borrow up to 50% of the market value of eligible investments
- The choice of when to make payments, although interest expense will increase your outstanding loan balance5
- Interest expenses may be tax-deductible up to the net investment income when the money borrowed is used to purchase taxable investments
Command Credit Line accounts are an effective cash flow management tool and offer a convenient financing source to pursue investment opportunities to help diversify your portfolio, exercise stock option strategies or meet other personal financial goals without liquidating securities.
Stand-By Letter of Credit
You can obtain a letter of credit secured by your brokerage assets for any amount more than $250,000. A letter of credit offers a guarantee of payment to help you purchase or transact business with companies you may have limited trading experience with. The maximum amount for a letter of credit that is secured by margin-eligible securities is $5 million; there is a $1.5 million maximum if the letter of credit is secured by other eligible assets.Compare These Personal Lines of Credit
| Asset Advantage Line of Credit | Custom Line of Credit | Command Line of Credit |
|
|---|---|---|---|
| Credit Line | $100,000 to $2 million | $2 million and up | Up to 50% of the value of marginable assets. |
| Uses | Nonpurpose4 | Nonpurpose4 | Purpose or nonpurpose |
| Fund Access | Access check, wire transfer | Wire transfer | Check, check card, wire transfer |
| Typical Loan to Value | Up to 60% of the value of marginable assets | Up to 95% based on asset type (varies depending on collateral) | Up to 50% of the value of marginable assets |
| Term Length | 36 months | 12 months | Any |
| Payment Required | Monthly interest only | Monthly interest only | None3 |
| Rates | Based on LIBOR6 or Prime7 | Based on LIBOR8 | Based on Prime7 |
1The proceeds from an asset-backed loan cannot be used to purchase additional securities. Only the Command Credit Line can be used to purchase or carry securities.
2 Securities-based lending has special risks and is not suitable for everyone. If the market value of your pledged securities declines below required levels, you may be required to pay down your line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of your pledged securities. The sale of your pledged securities may cause you to suffer adverse tax consequences. You should discuss the tax implications of pledging securities as collateral with your tax advisor. Wachovia Securities is not a tax or legal advisor. All securities and accounts are subject to eligibility requirements. Please read all line of credit documentation carefully.
3The Command Credit Line is a securities margin line of credit offered by the clearing broker for Wachovia Securities, First Clearing, LLC. Margin borrowing may not be suitable for all investors. When you use margin, you are subject to a high degree of risk. Market conditions can magnify any potential for loss. The value of the securities you hold in your account, which will fluctuate, must be maintained above a minimum value in order for the loan to remain in good standing. If it is not, you will be required to deposit additional securities and/or cash in the account or securities in the account may be sold. Please carefully review the margin agreement, which explains the terms and conditions of the margin account, including how the interest on the loan is calculated.
4The Asset Advantage Line of Credit and the Custom Line of Credit cannot be used to purchase or carry margin stock within the meaning of Federal Reserve Regulation U (12 C.F.R. § 221 et seq.)
5Interest charges will accrue.
6 The one-month LIBOR (London Interbank Offered Rate) as published in The Wall Street Journal, Eastern Edition, is a standard financial index used by banks in setting rates on many consumer loans.
7The Wall Street Journal Prime Rate as published in The Wall Street Journal, Eastern Edition, is a standard financial index used by banks in setting rates on many consumer loans.
8The LIBOR Market Index Rate (LMIR) as published in The Wall Street Journal, Eastern Edition, is a standard financial index used by banks in setting rates on many consumer loans.
Lending and other banking services available through the Banking Services Group of Wachovia Securities are offered by banking and nonbanking affiliates of Wachovia Corporation, including but not limited to Wachovia Bank, National Association, and First Clearing, LLC. First Clearing, LLC and Wachovia Securities, LLC are separate registered broker dealers and nonblank affiliates of Wachovia Corporation.
Lines of credit are subject to credit approval, verification and collateral evaluation. Initial decision is subject to your meeting specific underwriting requirements, and final approval will be based upon your satisfying these requirements. Programs, rates, terms and conditions are subject to change without notice. Other restrictions may apply.
