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Alternatives to personal loan

Monday, October 15, 2012 by Rajiv Raj

pl104n4Getting finance for buying a house or a car is very easy. That is because you can easily depend onhome loansorcar loans offered bybanks. However, if you need a loan to meet your other requirements then you will have to apply for a personal loan. A personal loan is an easy but an expensive form of credit. The rate of interest on these loans can vary anywhere from 14-24% depending on your job,credit history and other such factors. We try and explore other loan options that can be used to meet your requirements.

  • Top up loan- These emerge as a better option than personal loans as they come at a relatively cheaper rate of interest. The interest can vary from 11.25-14% which is way cheaper than what you would have to pay in case you went for a personal loan. This is because this is a secured form of credit unlike personal loans that come under the category ofunsecured loans. However, not everyone can avail these loans. They are applicable only if you already have a home loan. This is used to top up or increase the loan amount. 
  • Women's loan- If you are awomen entrepreneur and are planning to start or expand your existing business then you can explore this option. The interest rate being offered is at times up to 5% less than the existing rates. But note that it will be available only for the women customer and for only specific needs.
  • Gold Loan-This is another substitute to personal loan. For these loans you will have to mortgage thegoldwith abankor aNBFC. You don't need to worry about the security of gold as the gold lying in the lender's custody is insured. The rate of interest on these loans also average between 15-25%. It is likely that a bank may be able to give you a cheaper rate of interest than a NBFC. However, banks in urban areas-towns & metros- are not very willing to give out gold loans. So in case pf a temporary crunch you can compare the interest rate being offered in case of a gold loan and personal loan and then accordingly take a call.

 

MadanRajiv Raj

Rajiv is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India’s first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.

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