Need cash urgently? Borrowing money can be tricky if you don’t know which option suits you best. Two common choices are Personal Loans and Loans Against Securities (LAS). Here’s a breakdown to help you make an informed decision.
1. Personal Loan – Quick Cash Without Collateral
A personal loan is an unsecured loan—you don’t need to pledge any assets.
✅ Pros:
- Fast approval: Most banks and NBFCs disburse within 24–48 hours.
- No collateral required: You don’t have to risk your property, shares, or investments.
- Flexible usage: Can be used for any personal need—medical emergencies, travel, or debt consolidation.
⚠️ Cons:
- Higher interest rates: Typically 10–24% per annum.
- Lower loan amounts: Based on income and repayment capacity.
- Credit score dependent: Approval may be difficult with low credit scores.
💡 Tip: Personal loans are ideal for short-term emergencies or small to medium amounts.
2. Loan Against Securities – Use Investments as Collateral
A Loan Against Securities (LAS) is a secured loan where you pledge financial assets like stocks, mutual funds, or bonds as collateral.
✅ Pros:
- Lower interest rates: Usually 2–4% lower than personal loans.
- Higher loan amounts: You can borrow up to 50–80% of the value of your pledged securities.
- Quick approval: If you already have investments, approval is faster than other secured loans.
⚠️ Cons:
- Risk to assets: If you default, the bank can sell your securities.
- Limited usage: Some lenders may restrict funds for certain uses.
- Valuation fluctuations: Loan amount depends on the market value of securities, which can change daily.
💡 Tip: LAS is ideal if you have substantial investments and need a lower-cost loan without liquidating your assets.
3. Comparison at a Glance
Feature
Personal Loan
Loan Against Securities
Collateral
None
Investments (stocks, bonds, mutual funds)
Interest Rate
High (10–24%)
Lower (6–12%)
Loan Amount
Moderate
High (depends on pledged value)
Approval Time
Fast
Fast if securities are ready
Risk
Minimal to no risk of losing assets
Risk of losing pledged securities
Best For
Short-term, urgent cash
Large amounts, cost-efficient borrowing
4. Which One Should You Choose?
- Go for a Personal Loan if:
- You need small to medium amounts quickly.
- You don’t want to risk your investments or property.
- Go for a Loan Against Securities if:
- You need large amounts at a lower interest rate.
- You can pledge your investments and manage repayment responsibly.
5. Pro Tips Before Borrowing
- Check your credit score—it impacts personal loan approvals.
- Compare interest rates, processing fees, and prepayment charges.
- Borrow only what you can repay to avoid financial stress.
- If using LAS, monitor the market value of securities to avoid margin calls.
✅ Final Takeaway
Both loans are fast solutions for urgent cash needs, but the choice depends on your urgency, loan amount, risk appetite, and existing assets.
- Personal Loan: Quick, unsecured, slightly costlier.
- Loan Against Securities: Secured, lower cost, higher amounts, but risk to investments.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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