Smart alternatives to High-Interest Personal Loans in Tough Times

Sometimes, life gets tough for everyone. When things get hard, people usually try different plans or ask experts for help.

If that doesn’t work, some might consider a personal loan, but the interest rates on those can be high.

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If you’re in this situation, there are other options with easier loans and lower interest rates.

Loan against PPF

If you have money in a PPF account, you can borrow from it. Your PPF account needs to be at least one year old to do this.

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The loan is based on the money you’ve put in the account. The interest on the loan is one percent more than what your PPF account earns.

For example, if your PPF account earns 7.1 percent interest, the loan will have 8.1 percent interest. You pay it back in 36 installments.

Loan against FD

If you have a Fixed Deposit (FD) in a bank, you can get a loan against it. You can borrow 90 to 95 percent of the FD’s total value.

The FD amount is used as security for the loan, and you don’t have to pay fees for this.

The interest on the loan is 1 to 2 percent more than what your FD earns, making it cheaper than a personal loan.

Gold Loan

If these options don’t work for you, consider a loan against gold. Some banks, like SBI, don’t charge processing fees for loans up to Rs 3 lakh.

This loan is secured by gold, meaning you borrow money from the bank using your gold as collateral.

The interest rate on an SBI gold loan starts from 8.70%, which is much less than a personal loan.

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