• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • How Stock Loans Work
    • Get an Estimate
    • Non-Recourse Stock Loans
    • Supported Exchanges
    • Supported Markets
  • Reviews
  • About
  • Contact
  • Blog
Stock Loan Solutions

Securities-backed Lending and Stock Loan Info

What’s a Margin Account And How Does It Work

January 3, 2024 by Lily Roberts Leave a Comment

Margin Trading

Those of you who are interested in stock loans and how they work may be interested to learn about margin accounts.

Essentially, margin accounts let you borrow cash for the purposes of purchasing securities.

Read on to learn more about what it might mean for you to have a margin account.

What is a Margin Account?

So what is a margin account exactly and how does it differ from stock loans?

According to Schwab, “brokerage customers who sign a margin agreement can borrow up to 50% of the purchase price of marginable investments (the exact amount varies depending on the investment).”

These accounts allow investors to purchase up to double the amount of marginable securities than they could otherwise.

How They Work

Margin accounts, much like other accounts, do have an interest rate attached to them. In addition to this, margin account holders are required to have a maintenance margin.

A maintenance margin is a fixed minimum amount that must remain in the account for marginable trading to be allowed. This amount is determined by subtracting the borrowed amount from the total value of the account.

What are the Requirements?

You should keep in mind that not all securities can be purchased on margin.

According to FINRA,

“as a general matter, the customer’s equity in the account must not fall below 25 percent of the current market value of the securities in the account. Otherwise, the customer may be required to deposit more funds or securities in order to maintain the equity at the 25 percent level. The failure to do so may cause the firm to force the sale of–or liquidate–the securities in the customer’s account in order to bring the account’s equity back up to the required level.”

You should also be aware that firms do have the right to create “house” margin requirements. These simply have to be higher than the minimum set by FINRA regulations. You will want to check with your firm about these requirements.

What are the Risks?

Perhaps the largest risk of opening a margin account is that your securities could decrease in value, meaning you borrowed more than your account is worth (and will thus lose money on your investment).

The other major risk is that your firm could sell your securities (with or without contacting you first, depending on the terms of your loan). If your account equity dips below the required maintenance margin, your firm has the right to sell.

Whether or not these risks are worth the investment, you will need to decide.

Filed Under: Articles Tagged With: investing

Lily Roberts

About Lily Roberts

Lily Roberts is a seasoned financial writer with a strong academic background in history, having graduated from Hamilton College in 2015. Her unique blend of analytical skills from her history major and her deep understanding of financial concepts has allowed her to craft insightful and engaging content in the financial industry. Prior to her writing career, Lily gained valuable experience working as an intern at a reputable investment firm, where she honed her expertise in market analysis and financial communication. Her commitment to delivering accurate, informative, and accessible content continues to resonate with audiences seeking trustworthy financial education and information.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Get Our Most Recent Updates

More to See

aerial photography of rural

Comparing Asset-Based and Traditional Lending Options

December 6, 2024 By Lily Roberts

laptop computer on glass-top table

How to Borrow Against Your Stock Portfolio Easily

November 20, 2024 By Lily Roberts

fireworks display at night

Why a Stock Loan Works for Managing End of Year Expenses

November 18, 2024 By Lily Roberts

a close up of a clock with green numbers

Using a Securities-Based Loan to Finance a New Business Venture

November 13, 2024 By Lily Roberts

Stock Portfolio

Benefits of Borrowing Against a Stock Portfolio Instead of Selling

November 11, 2024 By Lily Roberts

Tags

asset-based lending financial markets financing insurance investing non-recourse loans retirement securities lending stock lending stock loans taxes trading

Older Articles

  • December 2024
  • November 2024
  • June 2024
  • May 2024
  • April 2024
  • January 2024

Contact

6582 S Big Cottonwood Canyon Rd, Ste 200
Salt Lake City, UT 84121

[email protected]

+1 866-446-1009

Footer

  • HOME
  • HOW STOCK LOANS WORK
  • OUR LIQUIDITY PROGRAMS
  • STOCK LOAN CALCULATOR
  • REVIEWS
  • ABOUT
  • CONTACT
  • BLOG

Recent

  • Understanding Non-Bank Lending: A Guide
  • Comparing Asset-Based and Traditional Lending Options
  • How to Borrow Against Your Stock Portfolio Easily
  • Why a Stock Loan Works for Managing End of Year Expenses
  • Using a Securities-Based Loan to Finance a New Business Venture

Search

Tags

asset-based lending financial markets financing insurance investing non-recourse loans retirement securities lending stock lending stock loans taxes trading

The information contained herein is presented solely for the purposes of discussion and under no circumstances should this be considered an offer to buy or a solicitation of an offer to sell any security. Stock Loan Solutions is not a registered securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. Stock Loan Solutions, its managers or affiliates have not been registered and do not plan to be registered under the Investment Advisers Act of 1940 or any similar state or foreign securities laws. Stock Loan Solutions is not registered under the Investment Company Act of 1940 or under any similar state or international securities laws. Stock Loan Solutions does not offer any form of investment (buy or sell) advice, tax counseling, estate planning, or any other securities or financial advice whatsoever. No statements on this website or any verbal or written statement by any representative shall be construed as such advice. We are neither licensed nor qualified to provide investment advice.
We take protecting your data and privacy very seriously. Do not sell my personal information.
Copyright © 2025 Stock Loan Solutions