Aspect	Personal Loans	Loan against Securities	Overdraft Loans	Cause based loan
What is it?	Money borrowed from a bank or lender for personal needs like education, travel, or emergencies.	Getting a loan by using your investments (like stocks or bonds) as collateral.	A financial arrangement where a bank allows an account holder to withdraw more money than what is currently in their account, up to a predetermined limit.	Education loan, Home loan, Car loan, etc., fall under this category, where you take a loan to fulfill a specific need.
How does it work?	You get a lump sum and pay it back in fixed monthly installments with interest.	You pledge your securities, and the lender gives you a loan based on their value.	You can spend more than your account balance, but there's a limit; interest is charged on the overdrawn amount.	The bank verifies the need for a loan and disburses it.
Flexibility in Use	Use it for any cause	Use it for any cause	Use it for any cause	Restricted to a specific cause
Collateral	Not required	Required	Usually required	Usually required
Interest Rate	11-30% p.a.	9-11% p.a.	9-15% p.a.	7-12% p.a.
Approval Process	Based on the Credit profile and background	Value of pledged securities	Account history and creditworthiness	Account history and creditworthiness

Which loan should I consider?

Simply put, there's no clear answer to this, as it completely depends on each profile.

If you are considering a loan to fulfill a specific goal, such as buying a house, a car, or financing your education, you should take respective loans tailored for such goals. These loans are curated for specific purposes, and you might not find a cheaper alternative.

However, if you're considering a loan for emergency purposes or for a situation where banks don't offer curated loans, you can explore the following options:

• If you have investments like stocks, bonds, or fixed deposits, and your loan requirement is lesser than half the value of your investments, then you should go for a Loan against Securities, as it will be the cheapest option.
• If you have a great relationship with your bank, you can also inquire about the Overdraft loan and see if that's the most cost-effective option for you.
• Lastly, if you don't have many investments and you're in an emergency, you can check out a Personal Loan since it doesn't require collateral. The bank will offer you a loan based on your credit profile and demographics, such as location, employment type, etc.