You can have purchasing power to buy more securities, make a large purchase, or use as a bridge loan for short-term liquidity needs. Be prepared for the possibility of a margin callhave other financial resources in place or predetermine which portion of your portfolio you would sell. Is Refinancing Your Student Loan Worth It? Meaning the maximum margin loan you can have is $6300. You decide you want to use a brokerage margin loan to increase the amount you can buy. In many cases, you might be better advised to simply pay with available funds, or if that is not possible, to not buy itwhatever it isat all. SuperMoney.com is an independent, advertising-supported service. However, its accuracy, completeness or reliability cannot be guaranteed. If you are unable to meet the margin call, your firm will sell your securities to increase the equity in your account up to or above the firm's maintenance requirement. Trading in the stock market can be a process that is complex and time-consuming. Let's say you purchase $16,000 worth of securities by borrowing $8,000 from your firm and paying $8,000 in cash or securities. Margin loans increase your level of market risk. Did you ask your broker questions about how a margin account works and whether it's appropriate for you to trade on margin? Investors who buy on margin pay interest on the loan portion of their purchase (in this example, $5,000), but normally do not have to repay the loan itself until the stock is sold. To pay off the margin balance you need to liquidate the equity in your account. Margin credit is extended by National Financial Services, Member NYSE, SIPC. Please assess your financial circumstances and risk tolerance before short selling or trading on margin. Short selling and margin trading entail greater risk, including, but not limited to, risk of unlimited losses and incurrence of margin interest debt, and are not suitable for all investors. So I noticed that I may have made a mistake in my understanding of Margin trading and was wondering if there was a way to pay off the Margin I borrowed without liquidating the stocks to do so? Pros and Cons of Refinancing Your Mortgage, Questions to Ask Before Refinancing Your Mortgage, SuperMoney's Student Loan Refinance Marketplace, How To Get The Best Student Loan Refinance Rates.
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