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.
