Personal loans can be a useful means to raise funds during emergency requirements. As Personal loans do not require any collateral to be availed, borrowers consider personal loans as an obvious choice for quick funds.
Personal loan interest rates are high with their repayment tenure short to approximately 5 years or less. Thus the EMI commitment in case of personal loans is higher.
Let us look at some more funding options.
Loan against Gold
Loans against gold are availed at a lower interest rate between 12-15% approximately. Here gold is pledged as security against the loan.
Financial institutions usually offer 90% of the value of gold as the loan amount. The processing time is less here.
Loan against Insurance Policy
Loans against insurance policies are available at an interest rate between approximately 9-13%.
By providing an insurance policy as a security, one can get a loan within an approximate span on 3-4 working days.
The policy has to be paid for at least 2-3 years before pledging it as security. Policy holders need to continue paying their premiums.
Loan against Fixed Deposits
Fixed deposits can be pledged to raise a personal loan during emergencies. The interest rates for these are approximately 1-2% higher than those for Fixed Deposits in itself.
The amount provided as loan is 85% of the value of the FD at that point of time.
Such loans are to be repaid in full before maturity of the FD.
Loan against Property (LAP)
The loan amount availed by banks towards existing property is up to approximately 60% of the prevailing market value of the property.
15-16% is the approximate interest rate for such loans.
The processing time is longer here as the valuation of the property has to be done prior to loan sanctioning.
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An online lending platform has massive advantages compared to traditional lending solutions like banks. With the process being digital, everything from loan application and approval to disbursement happens digitally saving commuting time, paperwork and hassles.
Lending from Employer
An alternative that salaried professionals can opt for is applying for a temporary loan from his/her employer and the amount can be deducted from the salary at the end of the month.
With processing time being less this option although used as a last resort can aid in improving the financial situation of the individual.