Usually, this readiness hinges on your cash or funding situation. If you are cash-rich, you'll be able to appropriately deal with short notice opportunities and threats. If not, then you must consider either a loan against property or a personal loan, since both have their advantages and disadvantages. Are you wondering which one could be the right option for you? Let’s look at both in detail.
Personal loan (PL) vs. loan against property (LAP) –
Understanding PL and LAP
• PL is an unsecured form of financing.
• LAP is a secured loan backed by real estate assets.
Benefits of LAP
• High loan amount.
• Repayment tenure up to 15 years.
• Due to high-worth collateral, interest rate is low.
• Can be used for various purposes.
Drawbacks of LAP
• In case of default, you may lose your property.
• No tax benefits.
• Approval process is lengthy.
Benefits of PL
• You do not need to offer any collateral.
• Minimal documentation required.
• Can be used to repay high-interest loans.
• Can be used for several purposes.
Drawbacks of PL
• Being unsecured, it has a high interest rate.
• If not used wisely, it can create unnecessary debt burden.
• Short tenure, up to 60 months.
Which is better – LAP or PL?
• PL is approved quickly, while LAP approval takes time.
• LAP interest rate is lower than PL.
Loan amount and tenure
• LAP offers a higher loan amount than PL.
• LAP offers a maximum repayment tenure of 15 years, while PL’s
maximum tenure is 60 months.
• Compared to LAP, documentation process for PL is simple.
Both LAP and PL have their own benefits and
drawbacks. Compare them thoroughly
before taking a decision.
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Know more: Loan Against Property vs. Personal Loan