Top Alternatives to Personal Loans: What You Haven’t Considered

Written by Hemangi Mokal  »  Updated on: July 17th, 2025 28 views

Top Alternatives to Personal Loans: What You Haven’t Considered

When facing unexpected expenses or planning big-ticket purchases, most people instinctively turn to personal loans. While personal loans are quick and unsecured, they come with high interest rates, fixed EMIs, and strict eligibility requirements. The good news? There are smarter, more cost-effective alternatives available in 2025 that offer greater flexibility and may even come with lower borrowing costs.


Let’s explore the top alternatives to personal loans that you probably haven’t considered—but should.


🔹 1. Loan Against Securities (LAS)

If you have a portfolio of investments like shares, mutual funds, insurance policies, or bonds, you don’t need to sell them to access liquidity. A Loan Against Securities (LAS) allows you to pledge your holdings as collateral and borrow against them. It’s a lesser-known but highly efficient alternative to a personal loan.


✅ Why Choose LAS?

  • Lower interest rates (as low as 9–12% p.a.)
  • Retain ownership of your investments
  • Get a credit limit or lump sum based on the market value of your securities
  • Quick processing through banks or online platforms

This is ideal for investors who want funds without disrupting their long-term wealth creation.

👉 [Read: Need Cash but Don’t Want to Sell Your Investments? A Loan Against Securities Might Be the Perfect Solution] to learn more.


🔹 2. Gold Loan

Gold is one of the most accessible assets in Indian households, and you can easily use it to raise funds. A gold loan involves pledging gold jewelry or coins to a lender, who offers you a loan based on the purity and weight.


✅ Benefits:

  • Loan amount of up to 75–90% of gold value
  • Interest rates starting from 7.5% p.a.
  • Minimal documentation and quick disbursal
  • Flexible repayment options (bullet, EMI, overdraft)


This is ideal for those who need quick liquidity and have idle gold lying at home or in lockers.


🔹 3. Loan Against Property (LAP)

If you own property (residential or commercial), you can avail a Loan Against Property by mortgaging it. This allows you to borrow a significant amount at lower interest rates and over a longer repayment tenure.


✅ Advantages:

  • Higher loan amounts (based on property value)
  • Tenure of up to 20 years
  • Ideal for business expansion, education, or medical needs
  • Though processing time is longer due to documentation and valuation, LAP is one of the most cost-effective options for large financial needs.


🔹 4. Loan Against Fixed Deposits

Fixed Deposits (FDs) are low-risk investments, and most banks offer loans against FDs instead of breaking them. You can borrow up to 90% of your FD value at an interest rate slightly above the deposit rate.


✅ Key Features:

  • Interest rate = FD rate + 1% (on average)
  • Instant loan without impacting FD maturity
  • No processing fees or foreclosure charges
  • This option is perfect for conservative investors who want to maintain their FD benefits and still access funds.


🔹 5. Credit Line from FinTech Apps

Many modern FinTech platforms offer credit lines or overdraft-like facilities instead of traditional lump-sum loans. You get a pre-approved credit limit, and you’re only charged interest on the amount you actually use.


✅ Highlights:

  • Borrow flexibly as needed
  • Easy mobile app access and quick KYC
  • Ideal for freelancers, salaried professionals, or those with irregular income
  • Apps like MoneyTap, KreditBee, and Nira are popular platforms offering these services.


🔹 6. Peer-to-Peer (P2P) Lending

Peer-to-Peer lending platforms allow borrowers to raise money directly from individual investors, often at negotiable interest rates. It’s a great option for those who don’t qualify for bank loans due to lower credit scores.


✅ How It Works:

  • Register and post your loan request
  • Verified lenders can fund your loan partially or fully
  • Rates and terms vary depending on your profile
  • Be sure to choose RBI-registered P2P platforms for safety and compliance.


🔚 Final Thoughts

While personal loans remain a popular choice for quick cash, they aren’t always the most cost-effective or flexible. Alternatives like Loan Against Securities, gold loans, and FD-based loans offer lower interest rates, faster approval, and customizable repayment options.


If you’re sitting on investments, property, or even idle gold, it’s time to rethink your borrowing strategy. Explore these lesser-known but powerful alternatives to meet your financial needs in a smarter way.


🔎 Frequently Asked Questions

Q. Is a personal loan the best option during an emergency?

Not always. Depending on your asset base, LAS or gold loans can be faster and cheaper.


Q. Can I apply for a loan without selling my mutual funds?

Yes. With Loan Against Securities, you can retain your investments and still borrow against them.


Q. What’s the fastest alternative to a personal loan?

Gold loans and LAS typically offer same-day or next-day disbursals.




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