6 Best Loan Options Instead Of Availing Personal Loan

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During the time of an emergency, many individuals rush and opt only for a personal loan. Personal loans are unsecured loans and interest charged on them loan is high. Many banks and financial institutions don't allow part payment of loans which means you end up paying the loan for the whole tenure which can be quite expensive.

Individuals in need of money can consider other types of loans which offer low-interest rate and can be closed at your discretion.

Here are 6 types of loans which one can consider instead of a personal loan.

Loan Against Gold

Gold loan interest rates are lower as compared to personal loans and this is probably the edge. Most of the banks and institutions do not charge processing fees. However, they are charged for valuation of gold.

Only a few documents such as ID and Address proof and PAN card are required to avail gold loan. Unlike personal loan where credit history is given utmost priority.

Overdraft facility

Individuals who have made a fixed deposit can avail loan on the same. In which case lien is marked on the fixed deposit until the amount is repaid. One can avail up to 80 per cent of the amount on the total deposit made.

Loan against Insurance policies

If one is eligible they can avail loan on their LIC polices. The minimum tenure to avail loan is a minimum of 3 yearly premiums. Only after that, you can avail for a loan which would be around 90% of Surrender Value.

Loan against Property

One can avail loan against property, but, lien will be marked on the property until full loan amount including interest is paid. What this means is that the owner cannot sell the property unless the loan is closed. As building or land will act as collateral until the loan is paid.

Loan against shares/mutual funds

One can pledge their shares instead of selling them when in need of cash. The loan is provided only against multiple scrips as it will act as a hedge for the bank in case price of a particular scrip falls sharply.


Loan against provident fund

This loan can be availed against the balance in your PPF account. One can avail a loan from your PPF account from the 3rd year of opening your account to the 6th year. There are certain conditions and loan can be availed for a specific purpose as suggested by the department.



Personal loan can be availed when an individuals is in need of cash and has no collateral such as property, shares, fixed deposit or gold.

Click to read advantages and disadvantages of personal loan.


Read more about: personal loans, gold loan
Story first published: Friday, July 29, 2016, 13:40 [IST]
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