Loan against property and Personal loan

We all find ourselves needy at one point or another in our lives. We all need money for setting up or raising our business, children’s higher education fees, or meeting wedding expenses. At such important times, we survey the options of loan against property (LAP) and personal loan (PL). And we choose among the two without much consideration and understanding, often miss some important factors.

                          

                                      

What is a personal loan?

A personal loan is an unsecured loan that you upraise from the bank for your personal use. There is no limitation on the proceeds of the loan amount you can use it to pay off your debt, construct a house, set up your business or even for your wedding etc.

Purpose of Personal Loan:

• Debt consolidation.

• Alternative to a payday loan.

• Home re-modelling.

• Moving costs.

• Emergency expenses.

• Large purchases.

What is a loan against property?

A loan against property (LAP) is a fixed loan layout against the mortgage of the borrower’s property.

Purposes of loan again property:

Loan Against Property can be taken for the following purposes:

• Expanding your business

• Sending your children for higher studies abroad

• Renovating your home

• For medical treatments

• Any other personal/business needs

Difference between loan against property and personal loan (The personal loan interest rate is given below)

Basis	Loan against property	Personal loan
Interest rate	12%-16%	11%-12%
loan amount and tenure	5-15 years	5 years
EMI	Smaller EMIs	Higher EMIs
Processing fee	0.5%-1.5%	1.5%-2.5%
Loan repayment	No collateral	Repaying is higher (changes of losing mortgages property)

Conclusion: LAP is a better option than a personal loan in terms of interest rate, loan tenure and loan amount. Therefore, for people requiring funds at short notice, a personal loan will be the only option. Also, the biggest risk accompanied with LAP is that the lender can seize your property in the event of your default in paying your dues. Therefore, make sure to self-evaluate your repayment capacity before opting for a LAP. Allahabad Bank offers Loan Against Property starting at an interest rate of 14.15% which is one of the best mortgage loan rates in India. Allahabad Bank Personal Loan offers differential rates for a different profile of customers and also fixed and floating rate schemes. Loan against property personal loan interest rate may be higher or lower for a special loan product.

Also read:- Remedies for personal loan debts