As the world moves towards evolution, the constant rise in expense can often take a toll on your pocket. Whether it’s fulfilling your dreams, funding your dream home or making a significant investment, understanding about the concept of loan and its options has become crucial than ever. The two most popular loan options are Loan Against Property and Personal Loan.
In this blog, lets unravel the layer of these loans and which one is the ideal solution for your financial needs. Read on!
What is a Loan Against Property
Loan Against Property is a secured financing option that allows you to procure funds by pledging your residential, commercial or industrial property as security. Financial institutions like banks and non-banking financial companies (NBFCs) offer this loan to salaried employees and business owners. With advantages like flexibility in using funds, sizeable loan amounts, competitive interest rates, etc., this credit option helps you manage your financial needs without much hassle.
Also Read - Guidelines To Get An Paperless Personal Loan Online
What is a Personal Loan
A Personal Loan is a type of unsecured loan where you need not pledge any security with the lender to avail of the loan. The lender checks your credit report, like credit score, monthly income, etc., before sanctioning the loan. The loan amount can be used for any purpose- to fund a holiday, buy a gadget, for wedding expenses, for one’s children’s education, etc.
How is a Loan Against Property Different from a Personal Loan
Below are some of the key factors which differentiates Loan Against Property from a Personal Loan:
- High Loan Amount: As Loan Against Property is a secured loan, the loan amount may be higher than the amount you can typically get from a Personal Loan. However, in Personal Loan the amount is dependent on your income and repayment capacity.
- Interest Rate: Loan Against Property offers affordable interest rate as compared to a Personal Loan. This also depends on factors like loan amount, loan tenure, credit score, property value, etc. When it comes to Personal Loan, interest rate solely depends on your eligibility.
- Loan Tenure: You can typically get longer tenure with a Loan Against Property compared to a Personal Loan. A LAP or Mortgage Loan can offer tenure up to 15 years, while a Personal Loan can offer a maximum tenure up to 7 years.
- Processing Time: A Personal Loan usually has a shorter processing time in comparison to Loan Against Property. It only requires your credit score and income verification to disburse the loan amount to you. However, LAP has a much longer processing time. As it has multiple levels of verifications before disbursing the loan amount to you.
Different Types of Loan Against Property
Following are the different types:
- Commercial Loan Against Property: It is a type of loan which is specifically provided to help finance your operations, if you own a business or help in expanding your property.
- Industrial Loan Against Property: This loan helps in meeting the financial needs of industries like manufacturing or renovation of business infrastructures.
- Residential Loan Against Property: It is provided against any residential home, apartment or flat to offer you the financial support.
Also Read - Different Types of Mortgage Loans in India
Different Types of Personal Loan
Following are the different types of Personal Loan:
- Personal Loan for Medical Emergency: It is a type of loan that helps to pay for you or your loved one during the time of emergency. This covers doctor’s fees, hospital bills, medication costs, nurse's charges, etc.
- Personal Loan for Travel: This loan can be used for all your travel-related costs. From airline tickets to shopping, you can pay it all with the help of this Personal Loan.
- Personal Loan for Wedding: Everything should be flawless on your special day, including the venue, catering, decorations, and bridal outfit. With a Personal Loan for Wedding, you can cover all expenses without any hassle
- Personal Loan for Home Renovation: You can now repair or renovate your home with Personal Loan. This includes expenses like carpentry, masonry, buying furniture, fixtures, etc.
Also Read - 5 Things To Know Before Applying For A Loan Against Property
To Conclude
When it comes to choosing between Loan Against Property and Personal Loan, both have their own set of advantages and disadvantages. Poonawalla Fincorp offers both Loan Against Property and Personal Loan at competitive interest rate and with 100% digital application process. Apply now and enjoy the benefits!
Frequently Asked Questions
1. What can I use a Personal Loan for?
There is mostly no end-use restriction on the use of a Personal Loan. You can use it to cover any financial need, including wedding expenses, children’s education, travel, medical treatments, etc.
2. Which is more affordable- a Personal Loan or a Loan Against Property?
A Loan Against Property usually carries lower interest rates than a Personal Loan, making it more affordable. Factors like loan tenure and credit score also determine the affordability of your loan.
3. How to determine the EMI of a Loan Against Property and Personal Loan?
You can use a Personal Loan EMI calculator or a Loan Against Property EMI calculator to determine the applicable EMI for a given loan amount, interest rate and tenure.