Personal loans are a go-to option for most when it comes down to acquiring additional funds to meet our expenses. But personal loans aren’t always the answer to all our problems. Sometimes we might require a nominal loan amount, sometimes the expense just can’t be put off anymore or other times we simply don’t qualify for one.
But depending on the situation, there are alte
atives to personal loans which we can opt for. These are as follows:
Top-up Loan:
If you have an existing loan, you can check if you could get a top-up loan. Top-up loan means borrowing an additional sum on the appreciated market value of the collateral you have provided for the loan. It can be considered as a new loan account or the same loan account based on the bank’s discretion. You may also have to get into a new loan agreement with the bank if the bank considers this top-up loan with a new loan account. The entry costs for this loan may be lower than entering a new loan altogether.
Credit Card:
In addition to using a credit card at retail outlets to pay your bills, you can use the credit card to withdraw money from an ATM for your immediate requirements. The amount that you can withdraw is subject to the credit limit on your card. However, you need to know that the cash advance taken will incur higher interest rates and must be done so only during cases of emergencies.
Overdraft Facility:
An overdraft facility is a revolving line of credit and gives you a credit limit of up to 100% of your fixed deposit collateral. Such a facility does not have any fixed repayment policy. The interest is charged only on the withdrawn amount and you even have the option of withdrawing any amount you have already paid. A high interest rate may be applicable to the overdraft facility. You may also have to pay a monthly fee of 1% on the unutilised credit limit.
Money Lenders:
Licensed money lenders can also be a viable option and come with the added advantage of faster loan approval and disbursal times. However, do keep in mind that these loans often come with higher rates of interest and higher penalty fees on late/missed payments.
Whatever option you choose, do make sure that you
compare loans & opt for a loan amount that you can pay back with ease. Be regular with your payments and don’t let a hasty, poorly researched decision snowball into an insurmountable debt.