4 Reasons Why A Loan Against Property Is Always Better Than A Personal Loan
We might not want to think about it, but there is bound to be a time in all our lives wherein we will find ourselves in urgent need of funds. It could be to expand or save your business; it may also be to finance your child’s overseas education or cover medical emergencies or renovate your home!
In such cases, most of us would turn to a personal loan if we do not have the required funds at hand in the form of savings. But is this your best option? We think not!
In scenarios likes these, you’re much better-off opting for a loan against property. Wondering why? Then read-on, this article will highlight 4 reasons why a LAP is a better funding option than a personal loan.
1. The amount of funding:
With a personal loan, you are most likely to receive a loan amount not exceeding Rs. 15, 00,000. This might seem like a sizeable amount, but when compared to the extent of funding afforded to you by a loan against your property, it pales in comparison.
With a LAP, you can avail up to 60 or 70 percent of your property’s value as the loan amount. And with the cost of property sky-rocketing these days, you are looking at a substantial amount of funding. In fact, most lenders will provider LAP amounts ranging between 10 lakhs and 7.5 crore!
2. Interest rates of a loan against property:
The next most important reason why a LAP is better than a personal loan is the interest rates they come with. With a personal loan, you could expect to pay anything between 15% and 22% per annum. However, with a LAP, you can enjoy rates as low as 12% and16% per annum. In other words, an LAP is provided to you at much lower costs than a personal loan making them the more cost-effective option among the two.
3. Tenures of a loan against property:
The availability of longer tenures means that you can repay the loan with ease. Longer tenures also allow you to prepay the loan and cut the short the tenure are terms you are comfortable with. However, when you do not have the liberty of choosing long tenures and are forced to opt for short tenures, you might be looking down the barrel of a very trying repayment process.
That said, an LAP generally offers you tenures ranging between 1 and 15 years. On the other hand, a personal loan normally affords your repayment tenures between 1 and 7 years.4. Eligibility:
The eligibility criteria of a personal loan depend heavily on an individual’s income, financial capabilities, credit score, etc. This means that in times of need, your loan application could be rejected. The eligibility of a loan against property on the other hand depends on your property; so as long as you have an undisputed property to put-up as collateral, your loan should be approved.
So if you are ever in an urgent need of fund, remember to opt for a loan against property. It will provide you a higher extent of funding at lower interest rates and long tenures with easier eligibility than a person loan.
I am a financial blogger since 2005, I am currently Working at All About Loan India as financial blogger, I love to share blog or article on Home Loan Plan and Policy,.