Which is a better choice—a Personal Loan or a Loan against Property?

A loan is your way out during times when you’re low on cash. However, with the vast variety of loans available out there, it’s not always easy to find and choose the best option. If you’re looking to decide between a personal loan and a loan against property, you need to know a few things about both these forms of credit before you make a decision.

Loan against Property vs. Personal Loan

The difference between loan against property and personal loans is quite fundamental. A personal loan is unsecured, meaning that you don’t need to put own collateral to take one. A loan against property, on the other hand, is secured with the property that you pledge to the lender. In order to pick the right one, you need to find out what your requirements are.

If you’re seeking a lower loan amount that you can quickly pay back within a short duration of time, then a personal loan may prove to be a better choice. Personal loans are quite easy to obtain if you have a relatively clean credit history. But keep in mind that their interest rates are usually quite high, ranging from 14% to 21%; that’s why you need to pay back your loan as quickly as possible. It’s a good idea to mortgage your house only when you need a higher loan amount, for a longer duration of time.

Many Banks offers both personal loans and loans against property at attractive interest rates. This banks also provides a part prepayment facility, and lets you foreclose your loan with absolutely no additional charges.

Consider the Interest Rates

A loan against property is known be one of the cheapest retail loans after home loans. A personal loan, however, is definitely not as cheap. While loan against property interest rates range from 12% to 16%, personal loan interest rates usually fluctuate between 13% and 21%. It’s important to choose an interest rate that’s commensurate with your ability to repay.

Check the Loan Amount

The personal loan amount that’s sanctioned to you depends mainly on your level of income, along with your ability to repay. The loan against property amount, however, is dependent on the value of the property you pledge. So it’s very likely that you’ll be offered different amounts when you apply for both these kinds of loans. Choose a loan amount that best suits your needs.

Whether it’s for a personal loan or a loan against property, it’s important to select a lender who you can trust.

Source: https://loanagainstproperty.quora.com/Which-is-a-better-choice%E2%80%94a-Personal-Loan-or-a-Loan-against-Property

Loan against Property in India: Must-Know Advantages

In times of financial trouble, a loan can act as a life savior. One loan that can be a solution to numerous financial problems is loan against property (LAP). Loan Against Property is a secured loan which is provided against the mortgage of a property.

LAP can be applied by people who are self-employed and are in need of a huge amount of money. By applying for LAP, they can secure funds without renting or selling out their property.

 When once applied for LAP, the property of the borrower is kept as a mortgage. The loan amount varies around 40-70% of the market value of the property.

 Advantages of Loan Against Property in India

Can Be Obtained Easily

Obtaining Loan Against Property is not much of a hassle. Once the borrower presents security (read – property) and gets an approval on it, loan sanction doesn’t take too much time.

Can Help in Fulfilling Various Purposes

 Loan Against Property can be used for a number of purposes, such as: To meet the financial needs of a commercial activity, trade, or for expansion of business. To suffice a family member’s educational expenses. To make repairs, extend or renovate an already existing commercial or residential property. For urgent and unavoidable medical treatments.

 Interest Rates Are Low

 Loan Against Property can be one of the best options to opt for as the interest rates of this loan are comparatively lower. Usually the interest rate of Loan Against Property ranges between 11.5% – 13.75% while for personal loan it hovers between 16% – 20%.

Longer Repayment Tenure

Nothing can be more beneficial for a borrower than getting longer repayment tenure. Loan Against Property offers the borrower a longer repayment tenure, generally between 10-15 years which eventually eases out the burden of EMI(s).

Optimum Use of Idle Property

Many people own a property that lies unused for a long span of time. To make optimum use of such property, you can secure a loan Against it. This allows the borrower to retain ownership of the property, and at the same time have an opportunity of acquiring a loan at a low interest rate too.

Continuous Ownership

 In case you acquire the loan, but are not able to repay the amount, you have the flexibility of selling off the property and settling the loan amount. This gives you a chance to continue the ownership of the loan secured, along with the benefit of having surplus cash as well.

Flexibility of Loan Amount

 Another benefit of Loan Against Property is the possibility of securing a larger amount of funding. The lenders allow flexibility of loan amount, depending on the type and value of the property.

 Source: (https://loanagainstpropertyindiablog.wordpress.com/2015/11/02/loan-against-property-in-india-must-know-advantages/)