Most people think that a personal loan is their answer for all the fund requirements they face. But do you really want to get into a debt wherein you need to pay about 40-50% of your salary?
If your answer is no, then here are a few cheaper options that can guarantee you funds at a cheaper rate-
Loan against gold assets:
Gold is one of the most thriving asset that all families want to own. Borrowing a loan against gold is a cheaper option as it is provided at abut 11-12% and you can avail amost 80% of your pledged gold value as a loan. But this option is best suited if it is for a short term period in the sense that the loan tenure should not exceed 12 months. These loans are provided by various pawn brokers and various other financial institutions, wherein, you can avail this loan in about 2-3 hours.
Loan against insurance policies:
Loan against your insurance policies are said to be quite hassle free. The loan amount will depend on the surrender value of the insurance. The higher the surrender value, higher the premium. You will be able to borrow up to 30-90% of the surrender value. The loan will be provided at 9-9.5%, which does not involve any processing fee. But if you pledge your policy with the bank, they will charge you with an interest amount of 14%p.a. The borrower, moreover, does not have to worry about the repayment, since the amount will be deducted from the policy at maturity. . In the case of Life Insurance Corporation of India (LIC), if the borrower decides to repay the entire amount within six months, he/she will still be liable to pay the half-yearly interest. The time taken for the loan to be processed is somewhere between 2—7 days.
Loan against property:
This option is feasible only if you are looking forward towards financing your long term needs. When you pledge your property, you can avail about 40-75% of the property value. However, the repayment period will range between 1-15 years. Banks like ICICI allow you to take an overdraft on the pledged property, so that interest can be charged only on the amount utilized by the borrower. You will be questionable by the bank as to the purpose of utilizing your funds, only if your loan requirement exceeds Rs 25 Lakh.
Before you finalize on any loan, make sure your read the fine print carefully, so that you can understand and evaluate better the hidden charges as well as the lending policy of your lender.