Alternatives to Personal Loans

If we are thinking of taking a Personal Loan, First and foremost thing  that comes in our mind is Interest Rate. Interest Rates are the main factor where people or borrower thinks a-lot before going for  a loan. Interest Rates Charged by banks on personal loans are relatively very high from other retail loans.

1) Loan against fixed deposit

• In case you have a long term fixed deposit in bank, it is good option to go for loan against fixed deposit instead of breaking the fixed deposit or instead of going for a personal loan.
• The interest rate on loan on fixed deposit is 1% to 2% higher than the interest rates what you get from bank from fixed deposits.
• Banks would give loans up to 80% of fixed deposit.
• This would be good option to go when you require money for short term.

2) Loan against Property

• Banks or financial institutions offer loan against property for residential, commercial properties and plots.
• You should go for such loan against property when the loan value is large in size say Rs. 5+ Lakhs.
• Generally you get loan between 60% to 80% of the property value.
• Interest rates are charged between 12% to 16% p.a.

3) Loan from employer

• This is a good way to get loan with cheaper interest rates.
• Generally employers would give loans to employees at very low interest rates between 4% to 10% p.a.
• You should encash such opportunities instead of going for personal loans from banks or financial institutions where they charge huge interest.
• Generally ,such loans are available with minimum conditions attached.

4) Loans against gold

• Loans against gold are one of the fastest ways to get loan.
• The loans can be against gold ornaments, gold coins and gold bars.
• There are several companies like Muthooth Finance or Mannapuram gold who are providing fastest loans against gold with low rate of interest.
• If you are in urgent pressing needs and if it is only for short term, you should prefer to go for such loans.
• The interests charged are between 12% to 15% p.a.
• You would get loan up to 80% of gold value.

5) Top-up loans for home loans

• These days, majority of the people are going for home loans to buy their dream house. If you already have a home loan and looking for some medium term loan for children education or any other personal commitment, you can take top-up loan on your home loans.
• The main advantage is, it comes up with lowest interest rates between 11% to 14% p.a. with almost minimum paperwork.

6) Loan against securities

• In the rapid changing world, everyone is looking for long term investment. Many of us are investing in shares and mutual funds. In case you want to take loan, you could use these securities as collateral security and take loan.
• Due to volatility in stock markets, banks or financial institutions would give loans between 50% to 60% of the total security value.
• The interest rates are between 13% to 16%.

7) Loan against NSC / Bonds:

• NSC and Bonds are secured investments.
• Banks or financial institution would provide loan against NSC/Bonds.
• Interest rate charged for such loans are around 13% to 16% depending upon the bank.

8) Loan against insurance policies:

• If you are exhausted all other alternative options, I would advice to go for loan against insurance policy.
• Banks would give loans for policies like LIC endowment policy or any other insurance policies.
• You should have paid 3+ years of insurance premium to go for such loans.
• The value of loan would be up to 90% surrender value of the insurance policy.
• The interest rates are between 10% to 14%.

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