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It is done with brokerage firms. It is called buying on margin.

It means that you buy some stock with cash, and use the stock as collateral on a loan.

The loan does have interest and varies by broker account. As a collateralized loan, the rates are not too bad. It may involve two transactions of purchase of shares.

The margin loan rate depends on the firm and 8.5% per year is common but could be higher or lower.

You generally have to pay that from cash monthly.

The risk is in large price drops on the stock, and leverage for some people gets high.

If the value of total stock drops to near the loan amount, the loan gets called and you have lost it all.

It increases both risk and return.

okay so, i just want to know does taking that ratio of 1/3 leverage with your money have an interest rate on it or something? I mean how does the bank make money otherwise if there is not interest fee? If there is a fee, how much is it approx, and when do you pay the fee? (every month, or when you pull out?)