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What is the Advantage of Loan Against Securities as Compared to a Personal Loan?

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Loan Against Securities: A Smarter Way to Borrow compared to Personal Loans?

I'm a regular investor in stocks and mutual funds, and I'm considering taking a loan for this. I've been considering a personal loan, but I'm also wondering if a loan against securities (LAS) would be a better option. I'm not sure which type of loan is right for me, and I'm worried about making the wrong decision. Can you please help me?

– Nisha Khanna (Delhi)

Thank you for your question. Your confusion is quite understandable. Nobody wants to take a loan and regret it later. A loan against securities (LAS) is a type of loan that allows you to borrow money against the value of your securities. This can be a good option if you have a good portfolio of stocks, mutual funds, or other securities.

A personal loan is a type of loan that is not secured by any collateral. This means that you don't have to put up any assets as security when you borrow the money. However, personal loans generally charge higher interest rates than LAS loans.

Here is a comparison of LAS loans and personal loans:


LAS Loan

Personal Loan

Interest rateLowerHigher
Collateral requiredYesNo
Loan amountCan be up to 80-90% of the value of your securitiesTypically up to ₹25 lakh
Repayment term1-5 years1-5 years

Which type of loan is right for you?

If you have a good portfolio of securities and you need to borrow a large amount of money, a LAS loan may be a good option for you. LAS loans typically have lower interest rates and longer repayment terms than personal loans.

However, if you do not have any securities or if you only need to borrow a small amount of money, a personal loan may be a better option for you. Personal loans are easier to obtain and you do not have to put up any collateral.

Ultimately, the best way to decide which type of loan is right for you is to compare the offers from different lenders. You can do your own research or use a loan comparison website to compare interest rates, fees, and other terms from multiple lenders.

Here are some tips for choosing a LAS loan

  • Compare interest rates from different lenders.
  • Make sure to factor in the fees that are charged with the loan, such as processing fees and prepayment penalties.
  • Choose a lender that has a good reputation.
  • Read the terms and conditions of the loan carefully before you sign anything.