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5 Better Loan Options In Place Of Personal Loans


Personal loans are the most expensive set of loans, when compared to any other type of loan. As they are not mortgage loans the interest rates are exceedingly high. This should make it the last loan option for consumers. Here are 5 other loan options that you should consider in place of personal loans.


Gold loans

Gold loans are the best option, as gold generally tends to lie idle in the bank locker. While personal loans can carry an interest rate of as high as 15 per cent to 24 per cent, gold loans these days come with an interest rate as low as 12 per cent.

5 Better Loan Options In Place Of Personal Loans

They are one of the fastest set of loans, when it comes to disbursement and you could receive cash or credit to the account within hours. Personal loans are almost never disbursed on the day the loan application is made. Gold loans have no processing charges, while personal loan processing charges are as high as 4 per cent.

Loan against fixed deposits

Loan against fixed deposits is another good option to consider. Generally loan is granted at 80 per cent of the fixed deposit amount. So, if you have a deposit of Rs 1 lakh, you can easily avail a loan of upto Rs 80,000. The interest rate is generally 1-2 per cent over and above the interest rate on your fixed deposit.

This is one of the best options, if you have adequate fixed deposits. An individual should consider this option rather than any other option, as they are cheap and easy to avail.

Loan against property

Here again, the interest rate on loans against property is much lower than a personal loan, as there is a collateral in the form of property, which makes it exceedingly safe for the bank to lend.


However, it is important to remember there is a lien marked on the property, so you should pay the money back, or else you could have your property in danger.

One should contact the bank, for processing and other charges, but, the interest rates are definitely lower than personal loan interest rates.

Loan against shares

If you have shares, it also makes sense to take a loan against shares or mutual fund units. However, banks lend only against certain shares and not all possible shares. So, it could be highly rated and A group shares that the banks or the lending institution would lend against.

One needs to contact the bank branch to get more clarity on the same.

Loan against provident fund

You can also avail a loan against provident fund, however, this is going to be a very tedious process. If you are willing to wait and there is no dire emergency, you can take the loan from your provident fund account.


We strongly advocate that investors should not take a personal loans as the interest rates are very high and so are the processing charges. If you are sure to payback the loan, which you always should , a better option would be gold loan, as they are easy to process.

Story first published: Monday, October 28, 2019, 10:41 [IST]
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