What Are The 7 Best Alternatives To Personal Loan?

The first and foremost option that comes to our mind when looking to meet the urgent fund requirements is a personal loan. However, what do you do if your personal loan application is rejected? Here are the best alternatives in such circumstances!

1. Loan against Public Provident Fund (PPF): PPF is a long-term savings instrument backed by the Government of India which offers safety in terms of interest rates. According to the rules of PPF laid down by the government, you can take a loan against PPF the year after which the account was opened, from the third financial year to the fifth year.
2. Loan against Employee Provident Fund (EPF): Another alternative to personal loans is taking a loan against EPF. You can apply for a loan for up to 90% of the amount deposited in the provident fund. However, in order to apply, your EPFO must be at least three years old and must be repaid in 24 months.
3. Loan against Gold: Gold can be pledged as collateral and be great as alternative personal loans. The amount approved depends on the value of the gold pledged and is generally taken up to 75% as the loan amount. Since there is collateral involved, this alternative requires minimal paperwork and does not require a check of your credit score.
4. Loan against Fixed Deposit: You can also take a loan in lieu of your fixed deposit account. Customers with a fixed deposit in banks can take advantage of this facility. However, the customer must visit the bank to apply for this and avail a loan of up to 90% of the deposit maturity amount on the application date.
5. Loan against Property (LAP): Other alternative personal loans include taking a loan against property. The amount availed on the basis of the property generally can go up to 80% of the value of the property. In addition to this, you can increase your eligibility when the value of the property grows.
6. Loan against Insurance: There are insurances that provide loan against a life insurance policy . However, this does not include money-back plans and ULIPs. Unlike the interest rates for personal loans that vary from 12% to 24%, the interest rate for loan against insurance ranges between 10.50% to 12.50%.
7. Loans against Mutual Funds: Other alternative personal loans include loans on mutual funds wherein you must make an agreement with the financer to lend the purchased units. The loan amount is lesser than the market value of the mutual funds.

Although there are so many alternative personal loans available, every option has its own set of advantages and disadvantages. Therefore, avail an alternative according to your needs. Choose wisely!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.