8 Alternatives to Personal Loans

8 Alternatives to Personal Loans8 Alternatives to Personal Loans

When you need a car loan or home loan, you would approach various banks to enquire about the interest rates and features pertaining to them. However in case there is any pressing need for money which cannot be taken through a specific loan, you would look for personal loans. Personal loans are expensive, as banks or financial institution charges 15% to 24% p.a. interest rates along with several conditions. Are there are any alternatives to beat expensive personal loans?

Why do people go for personal loan?

  • When we have urgent pressing need of money
  • Money is required immediately
  • Minimum paper work

The interest rate depends on the nature of job, company, location and credit history etc., It is available easily with a phone call or by sending an email to bank of financial institution.

8 Alternatives to expensive Personal 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.

Also read: 10 Best unique fixed deposit schemes in India

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%.

Also read: LIC Jeevan Sugam policy Review

Conclusion: Don’t get into the trap of personal loans where they charge high interest rates. Look for these alternatives before taking up such expensive personal loans.

Readers, I invite your valuable suggestions and feedback about this article.

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8 Alternatives to Personal Loans


  • Rishika Kothari


    What to do when you don’t have even one of the alternatives mentioned here? Would you then suggest the only option of personal loan?

  • SA Personal Loans

    Why would you want an alternative to personal loans when they are the best solution?

  • Ravi Gupta

    Also to add that if you do require loan amount for small durations of time, do not hesitate to ask your parents, close relatives and close friends as you may get it for 0% interest and can also return them on time without much of hassle.


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