Loan against securities vs Personal loan

A Loan Against Securities (LAS) and a personal loan are both useful financing options when you need quick access to funds, but they differ significantly in how they work. A Loan Against Securities is a secured loan where you pledge eligible financial assets, such as mutual funds, shares, bonds, or insurance policies, as collateral while continuing to retain ownership of your investments. Since the lender has security, LAS often comes with lower interest rates than unsecured borrowing. In contrast, a personal loan is an unsecured loan that does not require any collateral. Approval is primarily based on factors such as your income, credit score, repayment capacity, and employment profile, making it suitable for borrowers who do not wish to pledge their investments.

Secure liquidity without selling your investments explore loan against securities for competitive rates and flexible repayment options today.

In summary

Loan against securities vs personal loan comes down to whether you prefer lower borrowing costs by pledging investments or collateral-free financing. LAS typically offers interest rates of 8%–15% p.a., while personal loan rates generally range from 10%–30% p.a., making the right choice dependent on your financial needs.

• LAS is a secured loan with interest rates of 8%–15% p.a., while personal loans are unsecured and generally cost 10%–30% p.a. because they carry higher lender risk.
• Loan Against Securities or Personal Loan: LAS requires eligible securities such as shares, mutual funds, or insurance policies as collateral, whereas personal loans do not require any collateral.
• Loan Against Securities or Personal Loan: LAS lets you retain ownership of your investments, allowing dividends, interest, and potential capital gains to continue while your assets remain pledged.
• Personal loans are often processed within the same day to 24 hours, making them suitable for smaller, urgent funding needs without exposure to market-related considerations.
• Choose LAS if you own investments and want lower-cost borrowing. Choose a personal loan if you need quick, collateral-free access to funds.

Apply for a Loan Against Securities with Bajaj Finance to unlock liquidity while continuing to hold your investment portfolio.

A Loan Against Securities allows you to borrow funds by pledging your investments such as shares, mutual funds, or insurance policies. Instead of selling your assets, you keep ownership while using their value as collateral. Lenders typically offer a loan-to-value (LTV) ratio of 50–80%, depending on the security type. This ensures your investments can continue earning dividends or interest while you access liquidity.

A personal loan is an unsecured borrowing option where you receive funds without pledging any asset. Approval is based on your credit score, income, repayment capacity, and the lender’s terms. Personal loans are ideal for borrowers who lack investments to pledge or prefer not to risk their assets. However, the interest rates are generally higher than LAS due to the absence of collateral.

When comparing a Loan Against Securities or Personal Loan, the key difference is that a loan against securities is a secured loan backed by eligible investments, while a personal loan is unsecured and approved based on your income and credit profile.

Choose a loan against securities if you want to unlock funds while retaining your investments, or opt for a personal loan if you need collateral-free financing with a straightforward EMI repayment structure.

When comparing loan against shares vs personal loan in India, a loan against shares generally offers lower interest rates because it is backed by pledged securities, reducing the lender's risk. Personal loans are unsecured, so they typically carry higher borrowing costs.

While processing and other charges vary across lenders, a loan against shares is often the more economical option if you already hold eligible investments. Compare the complete fee structure before borrowing, and explore Bajaj Finance Loan Against Securities to access funds while continuing to own your investment portfolio.

*Processing fees, pledge charges and foreclosure terms vary by lender and product. Always refer to the latest schedule of charges before applying.

When comparing a Loan Against Securities or Personal Loan, the key difference is that LAS is backed by collateral and offers financing based on a loan-to-value (LTV) ratio of 50%–80%, whereas a personal loan requires no collateral and is approved based on your income and credit profile.

For example, a borrower pledging mutual funds worth ₹5 lakh at an 80% LTV can borrow up to ₹4 lakh from Bajaj Finance without selling their investments. Similarly, a loan against shares also allows borrowing against eligible securities while retaining ownership. In contrast, the same borrower applying for a ₹4 lakh personal loan must qualify based on income, credit score, and repayment capacity, as no collateral is required.

If you own eligible investments, LAS can provide access to funds while allowing your portfolio to remain invested.

Below are the fees, charges, and other costs of a loan against securities and a personal loan:

Here is a risk comparison between LAS and personal loan:

Avoid selling your investments during downturns, opt for loan against securities to secure funds without disrupting your portfolio.

Things to keep in mind while opting for loan against securities and personal loan

When deciding between a loan against securities and a personal loan, understanding their differences is crucial. Evaluate factors like interest rates, collateral, financial risks, and repayment terms to choose wisely.

1. Interest rates

• Loan against securities: These loans generally have lower interest rates since they are secured by your investments.
• Personal loans: Interest rates are relatively higher as they are unsecured and based on your credit risk.

2. Collateral requirements

• Loan against securities: Requires you to pledge financial assets like stocks or mutual funds as collateral.
• Personal loans: Do not require collateral, making them ideal for those without investments to pledge.

3. Loan amount

• Loan against securities: The amount depends on the Loan-to-Value (LTV) ratio, which is a percentage of the collateral’s market value.
• Personal loans: Typically approved based on your income and credit score, with fixed upper limits.

4. Financial risk

• Loan against securities: If collateral loses value, lenders may ask for additional security or sell your assets.
• Personal loans: No risk of asset loss, but non-repayment can severely impact your credit score.

5. Processing Time

• Loan against securities: Approvals are quick due to the backing of collateral.
• Personal loans: Processing may take longer, as lenders assess credit history and income stability.

Choose the right option based on financial needs and repayment capabilities.

Choose loan against securities when:

• You own eligible securities and want lower interest rates.
• You need substantial funds without liquidating investments.
• You are comfortable pledging assets and managing market risks.
• You want flexibility in repayment and ongoing portfolio growth.

Choose personal loan when:

• You do not own or do not wish to pledge securities.
• You need smaller amounts and quick approval without market exposure.
• You prefer fixed EMIs and predictable repayment schedules.

Here are the features and benefits of LAS:

• Borrow against shares, mutual funds, or approved insurance policies.
• Retain ownership of your investments while accessing liquidity.
• Lower interest rates compared to unsecured loans.
• Flexible repayment options tailored to your financial situation.
• Dividends or interest on pledged assets continue to accrue.
• Ideal for large funding needs such as business expansion or emergency cash flow.

Here are the features and benefits of personal loans:

• No collateral required for approval based on creditworthiness.
• Faster processing and simpler documentation.
• Fixed EMIs for predictable budgeting.
• Suitable for smaller or medium-sized expenses such as travel, weddings, or debt consolidation.
• Ideal for borrowers without investments or those unwilling to risk their assets.
• Higher interest rates compared to LAS, but it offers convenience and certainty.

A loan against shares, margin loans, and personal overdraft facilities all provide liquidity without requiring you to sell your assets, but they differ in collateral requirements, borrowing costs, risk exposure, and intended use. The comparison below answers the question: Compare risks and benefits: loan against shares vs margin loans vs personal overdraft in India.

For most investors, a Loan Against Shares from Bajaj Finance can be the more suitable option, offering lower borrowing costs and continued ownership of investments while providing funds for a wide range of personal or business needs.

Conclusion

Choosing between loan against securities and personal loan depends on your financial position, risk tolerance, and urgency. LAS offers cost efficiency and portfolio continuity, while personal loans provide quick access without collateral. Evaluate your assets, funding needs, and repayment ability before deciding.

Get funds while preserving your investments. Apply for loan against securities and enjoy competitive rates and flexible terms today.