• Financing the home improvement - in case if you are looking for doing some repairs to your house, opting for a personal loan is not necessary. You can do these repairs with a home improvement loan
• Buying a car - if you are buying car, a car loan would take care of your needs. You do not need to take a personal loan for that
• Speculative purposes - Never take a loan to invest in stock markets or other speculative purposes. This is nothing short of a gamble where you might lose out the money invested. Shot term speculative investments are not a wise option to use your money for especially in the instance of having to opt for a personal loan.

Alternatives to a personal loan

Loan against property is a good option that can provide you loan at lower interest rates to the tune of 3-4% lesser. The loan is available at a certain percentage of the property’s market value, usually around 40%-60%. LAP interest rates are cheaper by 3% to 4% compared to personal loan rates.

You could also utilise any investments you might have made so far, like shares, securities, fixed deposits, gold, insurance policies etc. You can pledge these as collateral and obtain a loan against them. For instance, you can obtain a loan against the surrender value of your life insurance policy from the insurance company or from a bank or obtain a loan from your provident fund account if you have had an employee provident fund account for more than 5 years. The interest rates would definitely be lower compared to the personal loan interest rates.

So before you decide to go in for a personal loan, check alternatives with lower interest rates. A personal loan may be easy to get but does not necessarily become the best solution.