Remember the days when you wanted to buy a car, you had to wait for atleast two months and that too without any choice as there were not many options available in the market. But, now you name a car and the model is available for you on easy installments. With globalization the customer has a lot of choices to make not only in the segment of buying but also getting them financed.
As of now if you want to buy a home there is a home loan available and if you want to buy a vehicle you may be approached by a dozen of sales people offering auto loan at competitive rate of interests. And, for other needs there is an option of personal loan, but many consumers are not willing to take this as they are available at very high rates of interest, usually ranging from 16 to 22%.
So to make it easy for the customer and to solve his problem there are some options available in the market. Many public sector banks are offering loans designed for specific spending purposes. These loans are available at lower interest rates than those for personal loans.
One of the most favored options these days is loan against gold. Both private and public sector banks are gearing up to offer gold loans as it is a better option in the short-term compared to personal loan. It is also fastest loan issued to a person, as the money is given immediately, unlike personal loan where one has to undergo a long and tedious procedure without any processing fee. But what if you don’t have enough gold or for any reason you are not willing to take loan against gold then the other option available is loan against your fixed deposit.
In case you have a fixed deposit lying with you and you are not going to use it in near future for meeting a personal need, you can use it to get a loan from a bank and the interest rates on such loans generally are 1% or 2% higher than the interest you receive on your fixed deposit.
Mostly all loans taken against collaterals can turn out to be cheaper than personal loans. Only, the key is to provide something as collateral against the loan and further, you can take such loans by tendering Life Insurance Policies, National Savings Certificate, RBI Bonds, Shares and Debentures. Also, some of the banks even accept mutual funds as security.
The processing fees charged for loans against security are also low as compared with those on a personal loan.