When you need funds quickly—whether for a medical emergency, business need, education, or personal expense—you often face a critical decision: Should you take a personal loan or opt for a loan against securities (LAS)?

Both options offer access to funds without much delay, but they operate very differently. Choosing the right one depends on factors like how urgently you need the money, your credit score, the assets you hold, and how much you want to borrow.

Let’s break down the key differences between a Loan Against Securities (LAS) and a Personal Loan, so you can make an informed choice that aligns with your financial needs.

What is a Loan Against Securities?

A Loan Against Securities is a type of secured loan where you pledge your financial assets—like shares, mutual funds, bonds, or insurance policies—as collateral. The lender grants you a loan based on the market value of these securities.

You continue to earn returns (like dividends or interest) on your investments while using them as collateral, and you don’t have to sell them to access funds.

What is a Personal Loan?

A Personal Loan is an unsecured loan, which means it doesn’t require any collateral. Approval is based mainly on your credit score, income, employment history, and repayment capacity. It’s a common choice for borrowers who need quick cash for various reasons, such as weddings, travel, education, or unexpected expenses.

When to Choose Loan Against Securities

A LAS is ideal if:

• You have a sizable investment portfolio (stocks, mutual funds, etc.)

• You don’t want to liquidate your assets

• You’re looking for a lower interest rate

• You need short-term liquidity with minimal paperwork

Example: You need ₹5 lakhs for business expansion. You have mutual funds worth ₹10 lakhs. Instead of redeeming them (and losing future gains or triggering capital gains tax), you can borrow up to ₹6–7 lakhs instantly by pledging those investments.

When to Choose a Personal Loan

A personal loan is better suited if:

• You don’t own enough financial assets to pledge

• You need funds urgently without dealing with collateral

• You want a fixed EMI structure and predictable repayment plan

• Your credit score is strong, and you can qualify for competitive rates

Example: You’re planning a wedding and need quick cash. You don’t hold stocks or bonds, but you have a stable job and a good credit score. A personal loan could be processed in a couple of days with minimal documentation.

Pros and Cons at a Glance

Loan Against Securities – Pros:

• Lower interest rates

• Continued ownership and returns on investments

• Quick disbursal with minimal credit check

Loan Against Securities – Cons:

• Market volatility affects your loan eligibility and risk

• Limited to the types of approved securities

• Risk of liquidation if you default
  
  

Personal Loan – Pros:

• No collateral required

• Wide range of lenders and loan products

• Fixed repayment terms

Personal Loan – Cons:

• Higher interest rates

• Heavily dependent on credit score

• Prepayment penalties may apply

In Conclusion

There’s no one-size-fits-all answer. If you own valuable securities and want low-interest, short-term liquidity, a Loan Against Securities is a smart and cost-effective choice. However, if you don’t have collateral or need funds for long-term expenses with fixed EMIs, a Personal Loan may be more practical.

Before making a decision, always compare interest rates, fees, repayment flexibility, and your financial position. Sometimes, consulting a financial advisor can help you choose the option that best protects both your money and your peace of mind.