Monday, June 24, 2024

Personal Loans Vs. Loan Against Securities- What you should choose

Personal Loans Vs. Loan Against Securities- What you should choose

Whenever you come in need of urgent funds or a medical emergency, many banks or financial institutions come to rescue you. Thanks to the different types of loans provided by banks, that makes it is easy for you to survive in tough financial times. 

There are various loan options for you, whether you have an investment to mortgage or not. The two best loan options, loan against securities or personal loan, are centered around the fact to help you. Keep reading the article to know which options are suitable for you. 

Loan against the securities 

A loan against securities is a secured loan. You can easily get a loan against securities by mortgaging stocks, bonds, shares, mutual funds, fixed maturity plans, etc. Your loan application amount depends on the sum of cash values of all securities that you pledge with the bank. Let us take a look at the features of loans against securities. 

  • The loan against securities is a secure loan. So, this loan approval process takes a long time. 
  • The credit score of the borrower is not the major point in deciding your eligibility for this type of loan.
  • Documentation to apply for this loan is more complex because the eligibility is based upon the security values. 
  • You can easily get loan values between 50 to 90%
  • The interest rate on loans against securities is low as it is low-risk and secured by credit for the lender.
  •  A pre-payment penalty is not required for this. 

Personal loans 

Personal loans are unsecured types of loans. It means you do not need to give collateral to get loans. Personal loans are disbursed based on income level, employment history, credit history, repayment capacity, and profession. 

If you have a good credit score, you become eligible to get a personal loan at low-interest rates. Here are the features of the personal loan you should know before applying: –

  • There are fewer documents required. You only need to give the address proof, identity proof, and income proof to apply for a personal loan.
  • The disbursal amount of personal loan is done quickly. If you want to avail pre-approved loan offer, the time of loan amount disbursal becomes faster.
  • The amount under the personal loan is flexible, and the lenders provide a wide range of loan amounts between Rs. 20,000 to 40 lakhs. 
  • It may be used to consolidate all present debts by paying off the high-interest debts.  
  • Personal loan, known as pre-payment penalty and foreclosure charges, is applicable in personal loan. 

Conclusion – Which is better? 

A loan against securities is less costly than a personal loan. The interest rate applicable on loans against securities is lower than the personal loan interest rate. The difference and features between a personal loan and a loan against securities define the suitability. If you do not want to give collateral to the bank, then personal loans are the best option for you.

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