Can I apply for an IPO by taking a loan?

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Are you a day trader?

You can but you shouldn't. It is because to avail a loan you will be paying interest rate, processing fee etc. This will make the cost of your investment capital high. Say, you took a loan of ₹ 1, 00,000 for 1 year at the rate of 15%. The processing fee is ₹ 2, 000. A simple calculation suggest that you will be paying ₹ 1, 00,000 + ₹ 2, 000 +₹ 15, 000= ₹ 1, 17, 000 to the bank. This is 17% above the investment amount for the IPO.

Now there is an element of risk in any IPO. It may not open on higher price on the listing day or may go down. In such a case, you would be losing a higher amount. So, it's better to wait, save money and then invest.

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