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Mired in deep financial crisis , Sandip approached his bank for a personal loan but was turned down! He tried his hands with other banks too but met with the same fate. Finally he decided to take a call on some private financial institutions! But the rate of interest was exorbitant enough to scare him away! What recourse does he have now to account for the deficit in his cash requirement?

Well, many among us might find ourselves landed in similar predicament at one point of time or other! And for all, personal loan seem to be the best option. But the rate of interest seem to be the major deterrent. Are there any other options that can come to your rescue at less cost? Let’s consider the following options:

Loans against insurance policy

Best AlternativesIf you have an endowment policy, you may well go for a loan against that particular policy. These loans can be availed by pledging the insurance policies to the bank. Generally 90% of the current surrender value of the policy can be availed as loan from the bank. Interest rates on these kind of loans range from 9% to 13%.. the only perquisite is that the policy should not have any premium pending against it. It generally takes 2-3 days to get loans against your policy.

Gold Loans :

With gold prices hitting new highs with each passing day, gold loans have become very preferred way of getting cash for meeting short time financial obligations of many people. And what’s more important is the fact the loans come at practically lower rate of interest than that of the personal loans. The interest rates on gold loans depend upon the value of gold provided as security to the banks and amount of loan taken. The higher the difference between them, the lower will be the interest rates offered on the loans.For example, if loan is taken for 80 per cent to 90 per cent of the value of gold then about 12 per cent to 15 per cent interest rate is charged on the loans. This is the highest rate of interest which is charged on these loans.And what is really intersetsing is the fact that there are practically no hassles involved in taking a gold loan. These loans are granted within 24 hours to a day of applying and involve very less paper work.

Loans against fixed deposits

If you have a fixed deposit in a bank and don’t want to break the deposit, you can take a loan against it. Also known as overdraft on fixed deposit, loans upto 75% - 85% on fixed deposit can be availed. The interest charged on the loans against fixed deposits is just 1% to 2% more than the interser on the fixed deposit. The only constraint against this type of loan is that tou need to repay the loan before the maturity of the fixed deposit.

Loans against property (LAP)

If you have a property and want to take a loan against it, you can easily approach the financial institutions/banks and can avail a loan easily to the tune og 50% - 60% of the market value of the peoperty, Interest charged on these kinds of properties generally range between 12%-16% And the processing time may take 7-10 days. However you should avoid this until and unless the cash requirement is too big!

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