Which Is Better for Investors in Thailand: Collateral Loans or Non-Recourse Stock Loans?

Jack Thomas
4 hours ago
5 min read

If you’re an investor in Thailand looking to unlock the value of your portfolio without selling your assets, you’ve probably come across two popular financing options: Collateral Loans Thailand and Non recourse stock loan Thailand.

Both offer a way to tap into the value of your investments while keeping your holdings intact. But the key question is—which one is better for you?

The answer isn’t one-size-fits-all. It depends on your investment strategy, risk tolerance, and financial goals. In this guide, we’ll break down both loan types, compare their pros and cons, and help you figure out which one might be the smarter move for your portfolio.

Why Investors in Thailand Are Exploring Portfolio-Backed Loans

Thailand’s financial landscape is evolving quickly. With a growing number of high-net-worth individuals, seasoned traders, and even mid-level investors looking for liquidity, portfolio-backed lending is gaining traction.

Instead of selling stocks, bonds, or mutual funds, you can borrow against them—just like using property to get a mortgage.

For many investors, this means:

Avoiding capital gains taxes
Maintaining dividend income
Keeping a long-term growth strategy intact

But here’s where the choice comes in—do you pledge your stocks and remain liable (collateral loans), or do you go for a non-recourse loan where the lender’s only claim is the stock itself?

Understanding Collateral Loans Thailand

A collateral loan is a financing arrangement where you pledge your assets—such as stocks, bonds, or mutual funds—as security for the loan.

The lender assesses the value of your portfolio and offers you a percentage (often 50–70%) as a loan. If you repay as agreed, you get your assets back in full.

Example: If your portfolio is worth 10 million THB, and the lender offers a 60% loan-to-value ratio, you could get a loan of 6 million THB without selling any shares.

Key Points:

Ownership remains with you: You still receive dividends and enjoy potential capital gains.
Loan terms can be flexible: You might get interest-only payments or longer repayment schedules.
Lower interest rates compared to unsecured loans.

Pros of Collateral Loans Thailand

Keep Your Investment Growth: Your portfolio stays invested, so if your assets rise in value, you benefit.
Potentially Lower Interest Rates: Because the lender has security, rates are often lower than credit cards or unsecured loans.
Flexible Use of Funds: You can use the loan for business expansion, property purchases, or even emergencies.
No Need to Liquidate Assets: Selling could trigger taxes or disrupt your investment strategy—this helps avoid that.

Cons of Collateral Loans Thailand

Margin Call Risk: If your portfolio drops in value, the lender may require you to deposit more assets or repay part of the loan.
You’re Personally Liable: If you default, the lender can go after you for the remaining balance beyond the value of the collateral.
Market Volatility Impact: In a sudden market drop, you could lose both your assets and face repayment stress.

Understanding Non Recourse Stock Loan Thailand

A non-recourse stock loan is different. Here, the lender’s only claim is against the pledged stock itself. That means if you default, the lender keeps the shares—but they cannot pursue you for any remaining debt.

Example: You pledge shares worth 10 million THB and get a loan of 6 million THB. If your shares drop drastically, you could walk away without owing more, as long as you surrender the pledged stock.

Key Points:

Lower personal risk—your liability is limited to the pledged assets.
Appealing for high-volatility stocks where future prices are uncertain.
Often higher interest rates because the lender takes on more risk.

Pros of Non Recourse Stock Loan Thailand

No Personal Liability Beyond the Collateral: Your risk is capped—if things go south, you don’t owe beyond the stock you pledged.
Protects Other Assets: Your personal and business assets remain safe from lender claims.
Useful for Volatile Portfolios: If you think your stock could drop significantly, this option minimizes your downside exposure.

Cons of Non Recourse Stock Loan Thailand

Higher Interest Rates: Since the lender shoulders more risk, they often charge more.
Lower Loan-to-Value Ratios: You might only get 50% or less of your portfolio’s value.
Loss of Future Upside: If you default, you lose all rights to the pledged shares—even if they later rebound in value.

Key Differences Between Collateral Loans and Non-Recourse Stock Loans in Thailand

Feature	Collateral Loans Thailand	Non Recourse Stock Loan Thailand
Liability	You’re personally liable for any shortfall.	No personal liability beyond the stock.
Interest Rates	Generally lower.	Generally higher.
Loan Amount	Higher loan-to-value ratio.	Lower loan-to-value ratio.
Risk to Borrower	Higher, due to margin calls.	Lower, as risk is capped.
Ownership Benefits	Keep dividends and capital gains.	Keep benefits until default; lose if surrendered.

When to Choose Collateral Loans Thailand

This option might be better if:

You have a stable, diversified portfolio with low volatility.
You want lower interest rates and higher borrowing limits.
You’re confident you can meet loan obligations without market disruptions.
You have strong cash flow to cover repayments.

Example Scenario: A real estate developer in Bangkok pledges his blue-chip stock portfolio to fund a property purchase, expecting stable dividends to help cover interest payments.

When to Choose Non Recourse Stock Loan Thailand

This might be your best bet if:

You’re investing in high-risk, high-reward stocks.
You want to limit personal liability in case of market downturns.
You prefer peace of mind knowing your other assets are untouchable.

Example Scenario: A tech investor in Chiang Mai holds volatile startup shares. She uses a non-recourse loan to access liquidity for a new venture, knowing she can walk away if the stock’s value plummets.

Tips for Investors in Thailand Before Choosing

Evaluate Your Portfolio’s Volatility: If your holdings are stable, collateral loans may be fine. If risky, non-recourse could be safer.
Understand the True Cost: Compare interest rates, fees, and potential tax implications.
Negotiate Loan Terms: Some lenders in Thailand are flexible—especially private lenders.
Plan for the Worst: Always have an exit strategy, whether that’s repayment, refinancing, or asset liquidation.
Consult a Financial Advisor: A local expert can guide you through Thai lending regulations and tax rules.

The Regulatory Landscape in Thailand

Thailand’s financial system has strict rules to protect investors and lenders. Not all lenders offer both products, and some operate under offshore arrangements.

Licensed lenders are regulated by the Bank of Thailand.
Private lending arrangements can vary widely—due diligence is essential.
Tax treatment may differ for domestic vs. offshore loans.

Final Thoughts: Which One Wins?

If your goal is maximum borrowing power at lower costs and you’re confident in your portfolio’s stability, Collateral Loans Thailand could be the way to go.

If you prioritize risk limitation and peace of mind—even at a higher cost—then Non recourse stock loan Thailand might suit you better.

For many savvy investors in Thailand, the right answer might even be a mix of both—using collateral loans for stable assets and non-recourse loans for riskier holdings.

In the end, the “better” choice isn’t about which is universally best—it’s about which aligns with your risk profile, investment strategy, and financial goals.