Interested in margin loans?
If you're a Vanguard Wealth Management client, set up time to talk with your relationship manager.
What is margin?
Margin lending is like a line of credit, allowing you to borrow cash against the value of your securities.1
When used appropriately, margin loans provide a convenient way to access cash for short-term financial needs. They can also enhance other investment strategies by increasing your borrowing capacity.
Ways to use a margin loan
Margin loans can serve as an alternative way to meet financial needs without disrupting your investments. You can use them for investment and non-investment related uses. To learn more about using a margin account and eligible collateral, please review our Margin Investing Guide (PDF).
Real estate
Margin loans can help improve your position when purchasing real estate. In some cases, it's more tax-efficient than selling your investments to get cash.
Business ventures
Margin loans can support business growth by securing cash for expansion, acquisitions, and immediate short-term capital needs.
Tax & estate strategies
Margin loans can help you meet tax obligations or estate planning needs without disrupting your long-term investment strategy.
Benefits of margin loans
- Margin loans are a ready source of credit. Unlike traditional bank loans, they don't require lengthy underwriting or credit checks.
- There's no set repayment schedule if you maintain the required level of equity in your account. You don’t need to make required principal or interest payments which may disrupt your monthly cash flow.
- You may be able to deduct your loan interest on your taxes. Consult your tax advisor for advice on your situation.
- Borrowing on margin is generally more cost-effective than other lending options, such as credit cards or bank loans.
- You're less likely to incur trading violations in a margin account because you may have margin cash available to cover trades. You'll also have more buying power in your margin account.
Risks of margin loans
- The securities you’re borrowing against—your collateral—may decline in value. If this happens and your collateral remains insufficient, you‘ll be required to deposit additional money or eligible securities to keep the loan balance outstanding.
- If you don’t meet the collateral requirements, we’ll sell securities in your account. While not required, we’ll try to notify you if your equity drops too much. You may experience investment losses if we need to take action.
- If the securities in your margin account decline too much in value, you could lose more money than you deposited into your account. For more information on risks, please review the Margin Risk Disclosure Statement or visit the FINRA or SEC websites.
Margin interest rate schedule
The interest rate is variable and based on a tiered schedule determined by the size of the loan. Generally, the higher your loan balance, the lower the rate. The following interest rates are applied to the full loan balance currently outstanding.
| Loan balance | Margin rate | Effective rate (includes 10.25% base rate) | Vanguard Wealth Management (includes 10.25% base rate -2.75%) |
| $500,000 and above | Please call 877-662-7447 to learn about our rate offers. | ||
| $250,000–$499,999 | Base rate + 0.50% | 10.75% | 7.5% |
| $100,000–$249,999 | Base rate + 1.00% | 11.25% | 7.5% |
| $50,000–$99,999 | Base rate + 1.50% | 11.75% | 7.5% |
| $20,000–$49,999 | Base rate + 2.00% | 12.25% | 7.5% |
| Up to $19,999 | Base rate + 2.50% | 12.75% | 7.5% |
Please contact your relationship manager to learn about our rate offers.
Margin rate: Base rate + 0.50%
Effective rate (includes 10.25% base rate): 10.75%
Vanguard Wealth Management: 7.5%
Margin rate: Base rate + 1.00%
Effective rate (includes 10.25% base rate): 11.25%
Vanguard Wealth Management: 7.5%
Margin rate: Base rate + 1.50%
Effective rate (includes 10.25% base rate): 11.75%
Vanguard Wealth Management: 7.5%
Margin rate: Base rate + 2.00%
Effective rate (includes 10.25% base rate): 12.25%
Vanguard Wealth Management: 7.5%
Margin rate: Base rate + 2.50%
Effective rate (includes 10.25% base rate): 12.75%
Vanguard Wealth Management: 7.5%
The base rate for Vanguard Brokerage Services is 10.25%. This is subject to change without notice. It last changed on December 20, 2024.
Premier rates for Vanguard Wealth Management
By consolidating more qualifying assets with us, you may enjoy greater savings on your margin loans.2 This exclusive offer is designed to provide you with more financial flexibility to access cash and personalized services when you need them.
As a Vanguard Wealth Management client, your interest rate is currently capped at the U.S. prime rate for any margin loan balance.3 Our dedicated team can provide clear information on eligibility, risks, and benefits of using margin loans.
How do margin loans work?
Borrowing on margin means taking on an interest-bearing loan backed by securities you hold in your brokerage account. You can use margin as an alternative to getting a bank loan or using credit cards.
Saving money with margin
Let's look at an example. Suppose you live in a high-tax state and need $500,000 for 90 days to purchase a new home while you sell your existing one. Your options are to liquidate your investments temporarily or take a loan. You plan to reinvest or pay back the loan in full with the proceeds of your existing home sale.
Option 1: Selling the securities in your brokerage account
- Sell $500,000 securities
- Results in a $166,667 capital gain
- $50,000 tax liability
Option 2: Using a short-term margin loan could save you $41,875.
- Borrow $500,000 from Vanguard at 6.50% for 90 days
- Cost of $2,708.33 per month
- $8,125 loan expense
Should I consider a loan?
Consider the same example above, but now you have investment losses within your account. It may make more sense to get $500,000 by selling some of your investments. If it's possible to sell assets in a cost-effective way, then you should consider that option.
Note that there are many factors to consider when making important financial decisions. Consider discussing large sales of assets and loan options with your financial advisor or tax professional.
The investment sale example assumes selling $500,000 worth of securities that have an original cost of $333,333 with a 50% gain.
The short-term margin loan example cost is calculated using the following formula: $500,000 x 0.065 = $32,500 annually / 12 months. It presumes 90 days and no monthly compounding of interest.
These examples are for illustrative purposes only and do not take into consideration your personal circumstances or other factors that may be important in making investment decisions. These examples are not a recommendation for a particular asset allocation or course of action.
Best Practices
FAQs
The Federal Reserve Board (FRB) determines which securities can be used for margin. These include:
- Most equities and ETFs trading over $3 a share.
- Most mutual funds that have been held for at least 30 days.
- Treasury, corporate, municipal, and government agency bonds.
Please note that new-issue equity offerings and newly purchased Vanguard ETF® shares aren’t eligible for the first 30 calendar days.
The only cost of a margin loan is your interest rate. Vanguard Brokerage Services® does not charge a loan origination fee, early payoff fee, or any other maintenance fees. There’s also no lengthy underwriting process or personal credit impact.
Borrowing on margin may help minimize various tax consequences. If possible, delaying the sale of assets and staying invested can help avoid unnecessary taxes and subsequent impact on your stated income.
Margin interest that's incurred may also be tax deductible against your net investment income. Please consult your tax advisor for more information.
To borrow, you must maintain a minimum of $2,000 in cash or marginable securities in a margin account. You can borrow as little as $1 or up to $50,000,000 before contacting us. You can borrow for one day or indefinitely, as long as you maintain the appropriate level of equity for your loan.
First, you need to apply and be approved for a margin account. On the day you're approved, you'll notice your assets journal within your transaction history.
This allows you to now borrow using those investments as collateral. You’ll also see a new section in Balances and holdings that says margin cash available.
You can now place trades online or call us to take a loan for non-investment related uses. We can send a loan by check, ACH, or wire to your bank on file. We can also send the loan to escrow for a home closing, with additional verification.
You'll only be charged interest when you use margin cash.
When you borrow from Vanguard Brokerage Services, monthly interest charges are automatically posted to your account. You can repay your loan at any time by selling securities or funding your settlement fund with an electronic bank transfer (EBT), wire, or check.
Any cash that posts into the settlement fund will automatically pay down your outstanding margin loan balance.
To qualify as a Vanguard Wealth Management client, you need $5 million in Vanguard funds and ETFs. To learn more, visit the Vanguard Wealth Management website.
A maintenance call is issued when your equity falls below our house maintenance requirement. The house requirement for most marginable securities at Vanguard Brokerage Services is currently 35%. We can increase a security’s house requirement at any time, without advance written notice.
Please see our Margin Investing Guide (PDF) for examples.
For more information about Vanguard funds or Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
All investing is subject to risk, including the possible loss of the money you invest.
Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.
The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.
VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.
1It's an interest-bearing loan that can be used to gain access to funds for a variety of reasons that can cover both investment and non-investment needs. For either use, a client should carefully consider their personal situation to help determine if borrowing money makes sense for them. The amount that can be borrowed is determined by the security type and security requirements. Margin rates are determined by the amount of the loan taken. Vanguard Brokerage Services doesn't provide legal or tax advice. Please consult a tax advisor when determining the tax implications of transactions in your account or the deductibility of loan interest.
2Qualifying assets include money invested in Vanguard funds and ETF.
3The prime rate is definitively tied to the Federal Funds rate, which is set by the Federal Reserve. The current rate can be found at https://www.federalreserve.gov/releases/h15/