Loan Against Securities vs Personal Loan

Published Mar 19, 2026 4 min read

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If you need quick funds, you may be confused between a loan against securities vs personal loan. A personal loan is unsecured and based on your income and credit score. But a Loan Against Securities (LAS) lets you borrow money by pledging your shares, mutual funds, bonds, or other investments — without selling them.

With LAS, you continue to hold your investments while getting liquidity, often at lower interest rates than personal loans. It is a useful option when you want funds but don’t want to break your portfolio. Understanding the difference between a loan against securities and a personal loan helps you choose the right borrowing option for your needs.

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

What is a Loan Against Securities (LAS)?

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.

What is a personal loan?

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.

How does each loan work?

LAS: Loan Against Securities (LAS) allows individuals to borrow funds by pledging securities like shares, bonds, or mutual funds. It offers lower interest rates, flexible usage, and risk management through margin requirements and collateral evaluation.
Personal loans: Personal loans are unsecured loans offered based on the borrower's creditworthiness. They require no collateral, have flexible usage, and follow a fixed EMI repayment structure over a defined tenure, often with higher interest rates.

Loan against securities Vs. Personal loan: Interest rates comparison

Here is a comparison between loan against securities and personal loan interest rates:

Aspect	Loan against securities	Personal loan
Typical interest rates	8% – 15% p.a. (varies by lender)	10% p.a. – 30% p.a. (depending on eligibility)
Interest Rate type	Often flexible or linked to market rates	Usually, fixed rates during tenure
Cost efficiency	Lower rates as collateral reduces risk	Higher cost due to unsecured nature

Loan against securities vs. Personal loan: Collateral and LTV

Loan Against Securities requires you to pledge investments, which lenders value to determine the loan-to-value ratio commonly 50–80%. Personal loans require no collateral, making them easier to access if you lack securities. However, the absence of collateral increases lender risk, resulting in higher interest rates.

LAS vs. Personal loan: Fees, charges and hidden costs

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

Aspect	Loan against securities	Personal loan
Processing fees	Up to 4.72%	Up to 3.93%
Prepayment charges	Up to 4.72% if sanction amount is above Rs. 5 crores	Up to 4.72% of the loan amount (inclusive of applicable taxes)
Additional costs	Pledge creation and maintenance charges	Depends on the lender

Risk comparison

Here is a risk comparison between LAS and personal loan:

Aspect	Loan against securities	Personal loan
Market fluctuations	Risk of margin calls if security value falls	Not affected by market risks
Asset ownership	You retain ownership of pledged assets	No asset involvement
Default impact	Securities may be sold by lender; credit score might get impacted	Credit score impact and possible legal implications

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.

When to choose loan against securities vs. Personal loan?

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.

Key features and benefits Loan Against Securities (LAS)

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.

Key features and benefits of personal loans

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.

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.

Frequently asked questions

Is loan against securities cheaper than a personal loan?

Yes, a loan against securities is generally cheaper than a personal loan. Since LAS is secured by your investments, lenders view it as lower risk and offer lower interest rates (around 8–15% p.a.), whereas personal loans are unsecured, often attracting higher rates (10% p.a. – 30% p.a.)

Which loan is faster to get LAS or personal loan?

Personal loans are typically faster as they require minimal documentation and no collateral evaluation. Loan Against Securities may take slightly longer because lenders must verify and pledge your securities. However, if your securities are already dematerialised and approved, LAS can also be processed quickly within 24–48 hours*.

What documents are needed for loan against securities vs personal loan?

For LAS: KYC documents, proof of securities ownership (like a demat account statement), and a signed pledge form are required.
For personal loans: KYC documents, proof of income (salary slips, ITRs), bank statements, employment verification, and some other documents are typically needed for approval.

Can I use an LAS for any purpose?

Yes, most lenders allow LAS to be used for almost any legitimate purpose, business expansion, education, medical emergencies, weddings, or travel. However, speculative trading, illegal activities, or investing in risky ventures may be restricted by the lender’s terms and regulatory guidelines. Always check permitted uses beforehand.

What are the hidden charges in loan against securities?

There are usually no hidden charges in loan against securities; all charges are disclosed upfront in the application form, KFS, and agreement.

Is a loan against securities a good idea?

A loan against securities can be a smart choice for quick liquidity while retaining ownership of your investments. It often offers lower interest rates compared to personal loans but requires careful risk management.

What is the difference between a personal loan and a loan against property?

A personal loan is unsecured, doesn’t require collateral, and typically has higher interest rates. A loan against property is secured by real estate collateral, resulting in lower rates and higher loan amounts, but it involves property risks.

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