5 Alternatives To A Personal Loan You Can Explore In An Emergency

Here are some alternatives to a personal loan with low-interest rates that you can explore during a financial emergency.
Personal Loans, Emergency, Finances
Personal Loans, Emergency, Finances

Emergencies can strike at any time, and being financially prepared is crucial. While personal loans are a common go-to option during financial crises, they often come with higher interest rates.

However, alternative low-interest loans can provide a financial safety net in times of need.

5 Alternatives To A Personal Loan

Let's explore some of these options to help you make informed decisions when faced with unexpected expenses.

Gold Loans

One of the oldest and most reliable forms of borrowing, a gold loan allows you to leverage your gold assets to secure funds.

Interest rates on gold loans are relatively lower than personal loans, making them an attractive option for those with gold ornaments or coins.

Getting a gold loan is simple and fast, with minimal paperwork. Pre-approved personal loans are also quickly accessible.

If you have a low credit score, it can be tough to secure a personal loan, and if you do, the interest rates may be significantly higher.

However, your pledged gold secures a gold loan, so your credit score doesn't impact the application process.

Gold loans offer different choices, such as paying all the interest at once and settling the principal amount later or opting for monthly installments like a standard loan.

Before deciding, understand all the details and choose the option that suits you best.

Loan Against Fixed Deposits

"If you have a fixed deposit with a bank, you can avail of a loan against it. This type of loan is secured by your fixed deposit, which serves as collateral, leading to lower interest rates than unsecured personal loans.

The interest rate is usually a percentage or two above the fixed deposit rate," says AK Narayan, CEO of AK Narayan Associates, a financial planning firm.

Loan Against Public Provident Fund (PPF)

Individuals contributing to a Public Provident Fund (PPF) account can consider taking a loan against it.

The interest rates on PPF loans are generally lower than personal loans, and you can repay the loan over a more extended period, making it a flexible option during emergencies.

Salary Advance Or Overdraft Facility

Some employers offer their employees salary advances or overdraft facilities. This allows you to borrow money against your future salary at a lower interest rate or sometimes even interest-free. Check with your employer to understand the terms and conditions associated with such facilities.

Pradhan Mantri Mudra Yojana (PMMY)

For small business owners and entrepreneurs, PMMY offers low-interest loans categorised into three stages—Shishu, Kishor, and Tarun. These loans aim to provide financial support to those involved in micro-enterprises, helping them meet their working capital and emergency fund requirements at affordable interest rates.


While personal loans are a common choice during emergencies, exploring alternative low-interest loan options can save you money in the long run.

Whether leveraging your gold assets, borrowing against fixed deposits or PPF, utilising employer-provided facilities, or tapping into government schemes like PMMY, being aware of these options can empower you to make financially sound decisions when unexpected expenses arise.

Always remember to carefully assess the terms and conditions of each loan and choose the one that best aligns with your financial situation and needs.

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