There can be major events in life – planned or unplanned – which require urgent finances. To meet such a requirement – be it financing the cost of the much-awaited vacation, wedding costs, expenses for higher education, debt consolidation, making new investments, medical emergency, and so on – you can choose to receive the requisite funds by borrowing from a financial institution. It is one of the easiest and convenient ways to arrange for funds. But while availing of credit, you can be on the horns of a dilemma and keep wondering whether to take a personal loan or a loan against property. Here, it would help if you remembered that both the loans are different, and understanding their features will help you make an informed decision. Read on to know more:
A personal loan is an unsecured loan, which means that you are not required to pledge any collateral for availing it. Personal loans can be customized as per your needs. The various types of personal loans include travel loans, marriage loans, home renovation loans, debt consolidation loans, education loans,s, etc. Here’s a look at the features of personal loans :
Eligibility criteria for personal loans:
Broadly, financial institutions consider the borrower’s age, income, work experience, and credit score before approving a loan application. As there is no requirement for a guarantor or any collateral, your credit score – reflecting your creditworthiness – is of paramount importance. For instance, on Finserv MARKETS, you can get your personal loan instantly approved if you have a credit score of 750 or above. What’s more, you can also avail yourself of attractive rates of interest.
Interest rates for a personal loan:
As personal loans are unsecured, financial institutions typically charge a higher interest rate. The interest rate can range from 11% to 20% and above, depending upon the type of borrower and other eligibility conditions. However, subject to fulfillment of conditions, you can avail of a personal loan interest rate of as low as 9.85% on Finserv MARKETS.
The loan amount for a personal loan:
The loan amount is contingent upon eligibility conditions, like income, credit score, and repayment capacity. For instance, on Finserv MARKETS, you can get a high-value loan amount ranging from Rs 25 Lakhs to Rs 40 Lakhs.
Loan tenure for a personal loan:
Typically, financial institutions allow for a repayment tenure ranging from 12 months to 60 months.
Loan processing time for a personal loan:
Once you fulfill the eligibility criteria, the loan application is approved, and the loan amount will be shortly disbursed in your account. For example, on Finserv MARKETS, the application is approved within minutes, and the amount is disbursed within 24 hours.
Loan against property:
The best loan against property can help you meet a wide slew of financial obligations such as balance transfer of an existing loan, consolidation of debt, financing your child’s education, and so on. Here, you are required to pledge your existing property as collateral to the lending institution. Though your ownership of the property remains intact, the financial institution has a legal right to take possession of the property in the event of non-repayment of the loan. Now let’s take a look at the features of this type of loan:
Eligibility criteria for a loan against property:
For this type of loan, you are required to fulfill the mandatory eligibility conditions such as age, income, and employment. Further, your property must be located in a specified city, as required by the financial institution. You also need to ensure that the property title is free from litigation and has not been already pledged. After assessing your property’s value, the lending institution also considers key variables, like your past borrowing record, existing debt obligations, and stability/continuity of your employment or business.
Interest rates for a loan against property:
Typically, financial institutions allow for a lower interest rate than personal loans – for a loan against property. The interest rate can range from 11% to 17%. The loan against property interest rate is also contingent upon selecting either a fixed or floating interest rate.
The loan amount for a loan against property:
The loan amount is a percentage of your property’s market value. Financial institutions can allow a loan amount ranging from 40% to 70% of your property’s value. The loan amount is higher when compared to a personal loan. For instance, the best personal loan against property available on Finserv MARKETS can allow you to avail of a high-value loan of up to Rs 1 crore.
Loan tenure for a loan against property:
This type of loan comes with a longer repayment tenure vis-a-vis a personal loan. For example, on Finserv MARKETS, you can avail of flexible repayment tenures of up to 360 months (30-years).
Loan processing time for a loan against property:
Typically, the processing time for this type of loan is longer. Some lending institutions can take up to a fortnight or a month to complete the process of approval and disbursal. But the best loan against property available on Finserv MARKETS provides for a quick online approval and disbursal process.
Which loan is better?
There is no one answer when it comes to selecting between both the loans. Both the loans have their own distinct features and benefits. Selecting either a personal loan or a loan against property is contingent upon your personal requirements, such as the number of funds required and your repayment capacity. If you want urgent funds for an emergency, a personal loan could be better. In contrast, if you want a large loan amount with lower interest and a longer repayment tenure, opting for a loan against property would be advantageous.
It is important to consider both types of loans’ features and benefits before zeroing in on the right type of loan. The loan against property, available on the Finserv MARKETS app, can provide you with a wide array of benefits, like a hassle-free online process and flexible repayment tenures, along with the provisions of balance transfer and part-payment. Alongside, always choose a trusted and reliable financial institution.