Synopsis: Investors who need funds think about getting a personal loan, however If they have stocks, mutual funds, bonds or ETFs they can get a Loan Against Securities (LAS). This loan usually has lower interest rates and higher loan eligibility than an unsecured personal loan.
Loan Against Securities lets you borrow money by using your existing investments as collateral, you can pledge shares, mutual funds, bonds, ETFs or insurance policies. For instance lets say you have funds worth ₹10 lakh and you need ₹5 lakh for a short-term expense. You can use your funds to secure a loan, this way you can avoid selling your investments and still get the cash you need. The lender decides how much you can borrow based on your securities, loan against securities often have lower interest rates.
Personal loans are unsecured loans that you can borrow without giving anything as a guarantee. Banks and other lenders approve these loans based on how much you earn your credit score and how long you have been working and how well you can pay back. For example if you need five lakh rupees for an emergency, to renovate your home, for a wedding or to pay off other debts you can apply for a personal loan and get the money. You do not have to give your investments, like funds or shares as a guarantee. Once you get the loan you pay it back in amounts every month for a certain period.
LAS vs Personal Loan: Key Differences
Which Option Offers Lower Interest Rates?
Loan Against Securities (LAS) generally has a lower interest rate than personal loans because it is backed by your investments. The lender has your investments as collateral, which makes the loan low risk and that is why they provide lower interest rates. On the other hand personal loans are not secured that is why the interest for them is higher.
Some lenders that offer lowest LAS interest rates
- HDFC Bank: 6.5% onward
- Kotak Mahindra Bank: 7.46% onwards
- IDFC FIRST Bank: 9.5% p.a.
- SBI : 9.95% p.a.
- ICICI Bank: 10.75% onwards
Also Read: 444-Day Special FD Rates 2026: Latest Interest Rates Across Major Indian Banks Up to 7.60%
Which Option Offers Higher Credit Limits?
When people need bigger amounts of money, Loan Against Securities is usually a better option for those who have a lot of securities. The amount of money people can borrow depends on the value of the securities they put up and the Loan-to-Value ratio of the lender. For instance if someone has funds worth ₹10 lakh and the lender says they can lend up to 50 percent of that then they can get a loan of up to ₹5 lakh. Personal loans are different, they are given based on how much money someone makes, what they already owe, their credit score and if they can pay back the loan. So the amount someone can borrow is usually limited by how much they make and their credit history no matter what they have invested in. For people who have a lot of funds or stocks, Loan Against Securities can often give them more money to borrow than a personal loan.For people who do not have a lot of investments to use as security a personal loan might be the only way they can get a loan.
Which One Should You Choose?
If you already have an investment portfolio and you need some money at a lower cost, Loan Against Securities is usually the better option.If you do not have securities that you can use to get a loan or if you prefer a loan without security then a personal loan is probably the better choice for you.
Written by Shreya Tiwari
