Need Urgent Money? Here Are 4 Secured Loan Options to Consider

Sometimes, life brings unexpected expenses, whether it's medical bills, job loss, or pay cuts. In such times, many people look for quick ways to access money. One smart solution is opting for secured loans, which are loans you get by pledging your assets as security. These loans are easier to get, come with lower interest rates, and often have fewer charges compared to unsecured loans.

What Is a Secured Loan?

A secured loan is a type of loan where you pledge something valuable, like property, gold, or investments, as security. Because the lender has your asset as a guarantee, the risk for them is low. If you fail to repay, the lender has the right to take the pledged asset to recover their money.

This is different from unsecured loans, which don't require any collateral. Unsecured loans are based on your credit score or income and usually have higher interest rates.

1. Loan Against Securities

If you have investments in stocks, mutual funds, or bonds, you can use them as collateral to get a loan against securities to meet personal or business needs. "Instead of liquidating your securities for cash, you can use them to get security, thus increasing the growth of your investment. As during the loan term, your securities will continue to earn interest, dividends and bonuses,'' suggests Harshvardhan Roongta, Director of Roongta securities.

Lenders usually give up to 70% of the value of the investments you pledge. These include shares, ETFs, life insurance policies, National Savings Certificates (NSCs), or Kisan Vikas Patras (KVPs).

You only need to pay interest every month, while the principal can be repaid based on your convenience. However, if the value of your investments drops, you may need to add more assets to maintain the required loan-to-value (LTV) ratio.

2. Gold Loan

Gold loans are among the fastest and most popular ways to get a secured loan in India. If you own gold jewellery or coins (with at least 18-carat purity), you can use them to borrow money.

"A gold loan usually has a repayment period of three years. Some lenders may offer a longer repayment period of four to five years. Banks and financial institutions usually offer 75% of the gold's current market value," says Satyam Kumar, CEO of Loan Tap.

This is a great option for those who need fast access to funds and own gold assets.

3. Top-Up Loan on Existing Home Loan

If you already have a home loan and have a good repayment record, you may be eligible for a top-up loan. This is an additional loan on top of your existing one and can be used for any personal or financial need.
However, the total loan amount, original plus top-up, must stay within the allowed LTV ratio (Loan-to-Value), usually around 80% of the property's value.

Top-up loans generally take 1 to 2 weeks to process. Some lenders even offer pre-approved same-day top-up loans to trusted borrowers.

4. Loan Against Property

If you own a residential, commercial, or industrial property, you can take a loan against property (LAP). This type of loan is ideal for those who need a larger loan amount and are looking for long-term repayment options.

Lenders usually offer between 50% to 70% of the property's market value. The repayment period can stretch from 15 to 20 years, and in some cases, even longer.

However, this is not the best choice for urgent cash needs, as it can take up to 2 to 3 weeks to get the loan approved and disbursed.