personal loan
personal loan

When one chooses to apply Personal loan online, they are required to submit various documents. Salary slips showing adequate income make up the important proof as it shows the lender you are capable of repaying the loan and won’t default on it. Salary slips indeed enable the lender to understand your monthly income and ability to repay the loan. Well, what if your current income is low, or you are freelancing or have income from other sources and require a loan to meet your financial needs? Is it possible to get the same if you have been denied a personal loan? Continue reading to know what other sources you may get the loan from. 

Loan against Gold

If you have substantial gold holdings and don’t have payslips with you, instead of choosing to apply Personal loan online, you may consider going with gold loans. The processing time of a personal loan is 2-7 days, whereas, for a gold loan, the personal loan amount will be disbursed within a few hours of submitting the loan application. Apart from the quick disbursal time, the borrower can also benefit from the lower interest on gold loans (starts from 7% p.a) against a personal loan where it usually ranges from 10-24% p.a. However; the prospective borrower should know the Gold loan sanctioned depends on the valuation of gold deposited as collateral. As the repayment tenure of the gold loan is on the shorter side with a maximum of up to 3 years, a gold loan is beneficial for people who are confident with the current income; they will be able to pay the EMI and principal amount on maturity. 

Loan against property

A personal loan & a loan against property are quite similar in nature as both of them don’t have restrictions on the end usage of loan proceeds; disbursal time is the drawback of the latter option. When you apply Personal loan online, the amount is disbursed usually between 2-7 days, but processing time for a loan against a property can take anywhere between one to three weeks due to the time-consuming nature of verifying property-related documents. Loan against property is given against the collateral of plot, which could be industrial, residential, and commercial and being the secured nature of this loan, the interest rate is lower than the personal loan, usually ranging between 9.65% to 15%, and the loan amount disbursed can be as high as 70% of the property’s market value. With loan tenure in LAP going up to 15 years, this type of loan is better for people who need a big-ticket loan, longer tenure, and smaller EMIs options. Just like Personal loan balance Transfer, individuals can also transfer their outstanding loan amount to another lender if getting a lower interest rate. 

Loan against FD

A loan against FD is more affordable than a personal loan in various parameters. In a personal loan, one can get a loan up to Rs. 35 lakh, but in a Loan against FD, the loan amount sanctioned depends upon the amount saved in the FD, and one can avail 90% of your FD amount.  Usually, banks charge about 2% over the existing FD rate when they give a loan. For example, if you are getting a 6% interest rate on FD, then the loan against FD will come around to be 8%. When you apply Personal loan online, there are processing charges which the borrower has to pay, but banks typically don’t charge processing charges for loans against FDs. Unlike a personal loan, the borrower continues to receive the credit of interest on their FDs.

Loan against PPF

PPF is not just a tax-saving instrument or an investment; one can also get a loan against a PPF account from the 3rd to 6th year of PPF account opening at just 1% interest rate plus over the existing PPF interest rate. PPF interest rates or Interest rates on Public Provident Fund are revised on a quarterly basis. The effective rate of interest on a PPF loan amount will be the then interest rate plus 1%. If compared with a personal loan which is between 10-18%, a PPF loan is comparatively cheaper. Even if you avail of the Personal loan balance Transfer, chances are little you will find a lender who can lend a loan to you at an interest rate lower than the PPF. Although you can choose to apply Personal loan online any number of times provided you have a good credit history, this is not the case with a loan against PPF, which you can avail of only once a year.

Loan against life insurance

Although the maximum loan one can get against insurance policies varies from one insurance company to another, it is usually seen one can get a loan equal to 80-90% of the surrender value of the policy. For example, if you have purchased an insurance cover of Rs 50 lakh and its surrender value(when you terminate it voluntarily) is Rs 20 lakh, you will easily get a loan of around Rs 18-19 lakh. When you apply Personal loan online, the interest rate depends on your CIBIL score, current income, and credit history, among other factors whereas, the interest on a loan against an insurance policy depends on the number of insurance premiums you have paid. More the premiums paid by you in the past, the lower the interest amount will be. However, this type of loan in India is only available against the money-back policy, whole life, endowment plan where there is a guaranteed return.

Loan Against LIC Policy

Get Loan up to 90% of the surrender value as a loan against LIC policy. The surrender value of your life insurance policy from LIC or another reputed private insurer is offered as security/collateral to take a loan. The maximum tenure for LIC loan can be up to the maturity of the LIC policy. Interest rate of LIC Loan has to be paid once in 6 months.

When you apply Personal loan online, the lender evaluates your Personal loan application based on several factors. Bank statements, tax returns, CIBIL score, credit history shows you have the means to repay your loan and won’t default on the payment. The lender will determine the amount of loan you are qualified to borrow based on these factors. With the options stated above, the loan amount is determined based on the collateral you submit to the lender. As lenders or banks have the option of selling the underlying collateral in case of a default, they usually take a more relaxed view of credit score, income, and other parameters while evaluating loan applications.