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Loan Against Property vs Personal Loan: Key Differences

By Finserv MARKETS - Jul 31,2019
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Loan Against Property vs Personal Loan

Everyone hopes to have the best of everything. Be it travelling the whole world to satisfy your wanderlust, or financing your child’s dream of studying abroad. Or even taking your business to greater heights. But is it really that simple and feasible? Yes. Loans, the popular financial instrument, make it hassle-free and help you realize your dream. There are different types of loan you can avail depending on your requirement. Here we talk about Loan Against Property and Personal Loan.

A Loan Against Property (LAP) is a form of a secured borrowing from a financial institution against owned property or an owned property currently under home loan. It can be used to fulfill personal and business needs like higher education, wedding and purchasing machinery, upgrading infrastructure respectively. A Personal Loan, on the other hand, is an unsecured form of borrowing, which does not need any collateral submission. It can be used for personal purposes such as for marriage, business, or higher education.

With advancements in technology, availing a Loan Against Property and Personal Loan has become very easy nowadays. The repayments tenures are flexible, and disbursals are hassle-free. One also gets to avail facilities like part payments. Most financial institutions today have their online portals, with which the customer can track and access all the relevant information.  As per the report from TransUnion CIBIL, the reputed credit bureau, Personal Loan and Loan Against Property witnessed a growth of 28% and 11.6% respectively, in Q3 2019.

Here are the important considerations and the key differences between a LAP and Personal Loan:

1 – Tenure – LAP is ideally offered for a longer tenure and ascertained based on age, income, property value, existing obligations (if any), employment status, and past credit records. Due to this long tenure, which can be as long as up to 30 years, the Equated Monthly Installments (EMIs) for the loan are lower and allow the customer the flexibility to maintain a higher disposable income. Contrary to LAP, Personal Loans come with shorter repayment tenure, which typically ranges from 1 to 5 years.

2 – Amount – The availability of a physical asset allows financial institutions with a security for the amount. While there are certain factors including property value and due diligence that can impact the disbursed amount, the borrowing can be more substantial. For Personal Loans, that are unsecured borrowings, the amount can range between Rs. 15 Lakhs – Rs. 25 Lakhs. For Loan Against Property, the amount can be as high as Rs. 5 Crores. Generally, a loan whose amount is equal to 40-60% of your property’s market value, is given by the lending institutions as Loan Against Property.

3 – Interest Rates – An essential consideration while opting for a loan is the rate of interest. As LAP involves less risk for the institution, the interest rate can be considerably lower as opposed to a Personal Loan wherein higher risks are involved with respect to repayment. Another great advantage of LAP is the floating rate option wherein the Loan Against Property interest rates can reduce as institutions provide benefits to the customer.

4 – Disbursement Time – For LAP, the turnaround time can be higher due to the time taken for property evaluation. Personal Loans can be disbursed in as quick as 24 hours.

5 – Top-up Facility – While disbursing Loan Against Property, the financial institution considers the prevailing market value of the property and provides an amount at a certain percentage of this value. If you have taken a loan of a certain amount, you can opt to increase the amount above the maximum limit and approach your lender for the same. You can opt for a Personal Loan top-up in case you require funds over and above your existing Personal Loan amount. The loan can be availed without pledging a collateral.

In a nutshell, depending on your financial requirement, you can either opt for a Loan Against Property or Personal Loan. On Finserv MARKETS, you can apply for a Loan Against Property and Personal Loan. Fast online process for approval, minimal documentation requirements and tailor-made offerings are the major benefits of availing these loans on Finserv MARKETS. Further, it offers a balance transfer facility on LAP with quick processing and without the need for additional documentation. What’s more, you can track all your transactions online for a great digital experience.

You can also read more about gold loan vs personal loan.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522