Personal Loan vs Loan Against Stocks: What to Choose in 2026?

Summary: 

• A personal loan does not need any collateral, but usually comes with higher interest rates. 

• The approval of a personal loan may depend on your credit score, income level, and repayment history. 

• A loan against stocks lets you borrow by pledging shares while still retaining ownership. 

• The loan amount in LAS depends on the value of your shares and the LTV ratio set by the lender. 

• You can secure a loan against stocks or mutual fund units at competitive interest rates on the airpay money app. 

When it comes to “urgent” funding, two options usually come up: Personal Loans and Loans Against Securities (LAS). While both provide access to funds, they are designed for different financial needs and borrower profiles. 

In a LAS, you pledge assets (such as stocks, property, or mutual fund units) as collateral and access funds without selling them. In contrast, a personal loan is “unsecured,” and you don’t have to deposit any security/ collateral to borrow. However, it usually comes with higher interest rates compared to LAS. 

So, which option should you choose? 

In this article, we will first individually understand both Personal Loans and Loans Against Securities (particularly Loan Against “Stocks”) and then see which funding route might suit you in 2026. 

What is a Personal Loan? 

A personal loan can be borrowed from a bank or NBFC (Non-Banking Financial Corporation) without giving any assets as security. The lender gives you a fixed amount, and you repay it over a chosen period through monthly instalments (EMIs).  

Since there is no collateral involved, the lender relies on your “credit profile” to decide whether to approve the loan. Usually, the approval is based on factors such as your: 

• Credit score 

• Income level, and 

• Past repayment record 

Post-approval, the loan amount is credited directly to your bank account. You can use this money for any purpose, such as medical expenses, travel, education, or personal needs. 

What is a Loan Against Stocks? 

A loan against stocks is a type of “secured loan” where you use your equity shares as collateral to borrow money. Instead of selling your investments: 

• You temporarily pledge them to a lender and  

• Receive funds based on their current market value.  

Importantly, you remain the owner of these investments and can still receive dividends, bonuses, or gains if their value increases. Additionally,  

• Interest rates are generally lower than those of unsecured loans like personal loans. 

• You can use the funds for personal or business purposes, as allowed by the lender. 

How is the Sanction/ Loan Amount Decided? 

It is based on the Loan-to-Value (LTV) ratio. This ratio determines what percentage of your investment’s market value the lender is willing to offer as a loan. For example,  

• Suppose the LTV is 50%.  

• Now, the lender will provide a loan equal to 50% of the current value of your pledged securities. 

• If your shares are worth ₹5 lakh, you can get a loan of up to ₹2.5 lakh. 

Additionally, as per a report published by the Financial Express (dated October 2, 2025), the RBI has increased the borrowing limits for individuals taking loans against shares.  

• Earlier, an individual could take a loan of up to ₹20 lakh against shares. 

• This limit has now been increased to ₹1 crore per individual. 

The impact? 

If you pledge your shares, you can now access a much higher loan amount, subject to the value of your securities and the lender’s terms. 

Personal Loan vs Loan Against Stocks: What Could be the “Right” Option in 2026? 

Both Personal Loans and Loans Against Stocks are widely used in India today. According to a report published by The Hindu (dated April 6, 2026), bank credit against shares and bonds reached ₹10,264 crore in January 2026 (a year-on-year increase of 5.1% from ₹9,766 crore).  

At the same time, digital personal loans have also expanded, with sanctioned amounts rising by about 53% year-on-year in Q3 FY25–26, and total outstanding touching ₹1.39 lakh crore by December 2025. 

These stats show that both options are gaining acceptance. However, they serve different needs, and the “right” choice usually depends on: 

• Your financial position 

• The urgency, and  

• Whether you are willing to use your investments as collateral. 

To improve your selection, learn when you may choose a personal loan or go after a loan against stocks: 

Conclusion  

So now you know what a personal loan and a loan against stocks are. They are both funding options that offer quick access to money. However, they differ in terms of borrower profile and collateral needs.  

A personal loan might suit individuals with a strong credit profile and those who do not want to pledge assets. On the other hand, a loan against stocks can be considered when you hold a portfolio of equity shares and want to secure funds at comparatively lower interest rates.  

The final choice may depend on the urgency of funds, your income level, and risk tolerance limit. 

Looking to secure a loan against your stocks or mutual fund units at competitive interest rates? 

Download the airpay money app today! We are a 360-degree financial wellness platform trusted by 1,00,000+ users. The entire application process is 100% digital and can be completed online without any in-person branch visits.