Personal Loan vs Loan Against Property

Loan against property is a kind of loan available in the Indian market where an applicant receives the money basis the property he mortgages in return. With one of the lowest interest rates in the country after personal loans, loans against property can be useful for higher education, business investments and major medical treatments.

In comparison to personal loans, loans against property have the following features:

·         The credit value for loans against property are much higher- Since there are properties that are being mortgaged for security, the credit limit for these loans are much higher. This enables the user to get more money to leverage.

·         Lower interest rates- This loan scheme has a much lower interest rate which helps the applicant pay less in equated monthly installments. Unlike personal loans, the mortgage offers security that enables banks to lend at a lower rate.

·         Longer time span- A loan against property has a loan tenure of up to 15 years, this gives the applicant more time to pay back the loan. In comparison to this, a personal loan has a tenure of 5 years max.

·         Can be useful for both recreation as well as business purpose- Loans against property have the magnitude to be useful for not just recreational purpose but also business purpose.

Personal loans on the other hand have its uses. For start, a personal loan is swift and unsecured. One can apply for a personal loan that is often up to Rs. 25 lacs with a good credit score and income certificates. No mortgage ensures the applicant does not have to worry about locking in assets until the time the loan is paid.

In case the loan amount is less and the applicant is willing to get over with the debt cycle over a shorter period of time, a personal loan is a much smarter option. Even though the rate of interest is higher, the approval time and limited complications to get that approval are much less.

In case the requirement is more and the applicant has a property that can be mortgaged, an LAP makes better sense. Lesser interest rates, longer tenure and higher loan amount are the features you are looking at. 

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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