Making the Right Choice: Personal Loans v/s Loans Against Securities.

Personal loans and loans against securities are multipurpose loans that help fund your financial needs. Both have their respective pros and cons. Find out which is a better fit.

• Personal loans and loans against securities can help you fund various financial needs.
• A personal loan is an unsecured loan available instantly but with higher interest rates.
• A loan against security is secured against your investments and offers lower interest rates but can offer limited funds.
• Assess the pros and cons of each, analyse your financial needs and then choose a suitable financial solution.  

Financial needs can arise anytime unexpectedly, which may require you to explore the various loan options available. Personal loans and loans against securities are two multipurpose loan options which are pretty popular. You can get either for funding any financial need that you might have, whether it is weddings, travel or an emergency. 

But which of the two is better?

Let's analyse. 

What is a personal loan?

A personal loan is an unsecured loan that does not require collateral security. These loans are issued instantly with minimal documentation.

Pros and cons of personal loans 

Also Read - Find out how a personal loan balance transfer can help in saving the interest outgo.

What is a loan against securities?

A loan against securities allows you to take a loan using your investment securities, such as stocks, bonds, deposits or mutual funds, as collateral.

Pros and cons of loans against securities 

Also Read - Find out whether a loan against a mutual fund is a good choice or not.

Which to choose?

Both personal loans and loan against security have their own merits and demerits. The choice ultimately boils down to you and your needs. 

A personal loan is ideal if –

• You don't have assets to pledge
• You need instant funds

On the other hand, loans against securities are better if –

• You want lower interest rates
• You have a sizeable investment portfolio to pledge 

So, assess your finances and needs and then make an informed choice. 

Also Read – Find out how to spot a fraudulent personal loan

Sources:

• financialexpress.com
• zeebiz.com
• business-standard.com