In today’s world, the concept of loans is quite popular among the common people. People often find themselves in difficult circumstances where they need urgent monetary help. During such situations, the option of a loan seems exceptionally comforting.
There are several loan options, but personal loans and loans against property are two of the most sought-after paths. Vintage finance offers the ideal loan services for both loans. Therefore, they have won the hearts of thousands of customers. This article highlights the features of both loans to help you comprehend which one to choose.
What is a loan against property?
LAP or loan against property is identified as a loan dispersed against residential or commercial property. It is given out as a collateral loan. The loan is secure and sanctioned against a fixed asset. The chances of getting a wealthy loan amount in LAP are possible as you get the loan against your property.
What is a personal loan?
A personal loan is identified as an unsecured loan that the bank disburses. No collateral property or mortgage land is required to get the loan. However, the loan amount sanctioned under a personal loan might be lower than LAP since it is not given out against a fixed asset. Therefore, people usually apply for personal loans to fulfill basic financial requirements.
Also read – Tips to get personal loan for salaried employees
Personal Loan Vs. Loan Against Property
Processing Time
The urgency to receive the loan amount by an individual depends upon the purpose of the loan application. A personal loan has less processing time than a loan against property;and he,nce the former is faster.
The credit assessment process of a personal loan requires minimal steps, while in-depth analysis is performed for loans against property. Therefore, the latter is unsuitable for individuals who want quick loans since it can take 15 to 30 days to disburse the loan amount.
Rate of Interest
The interest rate is one of the primary factors determining the choice of a loan. Individuals take loans depending on the interest rate of a specific bank. Since loans against property are secure, the interest rates are lower than personal loans. The rate ranges between 11%-16% per annum. However, for personal loans, no security is required, and hence the interest rates are high. They range between 11%-24% per annum.
Loan tenure
The loan tenure affects the decision of several individuals who want to take up loans. Having a long loan tenure reduces the payments for EMI and increases the borrower’s ability to bear large amounts of loans. The duration for a loan against property can go up to fifteen years. In fact, there are specific lenders who can even offer a loan tenure of 20 years.
However, the loan tenure for personal loans is extremely low. Individuals usually need to repay the loan within five years, while some lenders allow a period of seven years. Therefore, individuals who struggle with getting a personal loan because of a lack of repayment capacity can easily afford a loan against property.
Quantum of Loan
The quantum of the loan determines the amount of loan amount you will receive from the bank. Loan against property offers a loan amount of 40% to 70% of the collateral property. Therefore, if you need a large sum of money urgently, then a loan against property is ideal. If your property is large and valuable, then you can even get the loan amount in crores.
However, in the case of a personal loan, the amount largely depends on the individual’s monthly income. Other factors, such as age, credit score, etc., also affect the quantum of loans. If you can only repay the loan amount, your personal loan will be sanctioned. It is highly subjective, and the loan amount limit ranges between 10 to 15 lakh.
Conclusion
After reading the above points about both loans, you might feel that the loan against property is a better option. Indeed it is. Compared to a personal loan, the latter offers many offerings and does well regarding borrower comfort. The loan tenure, amount, and interest rates are much more satisfactory than personal loans. However, the disbursal time is extended.
Therefore, if you want the loan faster, then a personal loan is ideal for you. In fact, under LAP, there is a constant threat of losing your property since if you default on the repayment, the lender will take control of your collateral property. So, consider your options and choose a loan from Vintage Finance that suits your preferences appropriately.