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Personal Loans VS Loans Against Property

There are many instances in life which will require you to shell out a lump sum of money. This can be for personal holidays, medical emergencies, marriage or home redevelopment. So, the questions come up, which loan is better? Personal or Loan Against Property. Click here to know more about loans

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Personal Loans VS Loans Against Property

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  1. Personal Loans VS Loans Against Property

  2. INTRODUCTION • There are many instances in life which will require you to shell out lump sum of money. • This can be for personal holidays, medical emergencies, marriage or home redevelopment. • In many circumstances, these situations would lead you to loop out for some sort of loan that would meet the cash requirement immediately.

  3. In such situations, one’s mind would go to taking a personal loan. • Some actually do end up taking personal loans for holiday. • However, in the bank there is a different loan that is also gaining ground. This is the Loan Against Property. • This implies that you can take up a loan against your existing property. • So, the questions come up, which loan is better?

  4. What is a personal loan? • This is an unsecured loan that the bank will advance to you for a large sum of money. • This is usually taken up for a variety of reasons, the bank will not question you for the reason behind the loan. • Personal loans charge a high rate of interest given that they are unsecured.

  5. What is a loan against property? • Loan Against Property is a loan wherein, your residence of land is taken up as collateral. • The interest charged on this is lesser than personal loans. It is one of the best retail loans after home loans. • Like personal loans, there is no restriction on the proceeds of the loan against property.

  6. How to choose between the two? • Processing Time – Since personal loans do not require collateral, there is no documentation or verification that is required for these loans. • This makes the processing time for the loan faster. • Loans against property will involve the bank mortgaging the property. • For this you will need to submit and verify multiple documents which makes the processing time anywhere between 15-30 days.

  7. Interest Rates – Being a secured loan, the interest rates for the LAP is usually lower • The interest rates hover around 12%-16%. • However, since personal loans are unsecured loans, their interest rates are much higher. • Given these two points, depending on the urgency of your requirement, the nature of risk and the rate of interest you are willing to pay you can choose between personal loans and loans against property.

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