There can be major events – planned or unplanned – that 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 most convenient ways to arrange 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 loans are different, and understanding their features will help you make an informed decision. Read on to know more:
A personal loan is unsecured, meaning you are not required to pledge any collateral to avail of it. Personal loans can be customized as per your needs. The various types of personal loans include travel, marriage, home renovation, debt consolidation, 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 loan instantly approved with a credit score of 750 or above. What’s more, you can also avail yourself of attractive interest rates.
Interest rates for a personal loan:
Financial institutions typically charge higher interest rates as personal loans are unsecured. 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 requirements, 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 depends on 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 to your account. For example, on Finserv MARKETS, the application is approved within minutes, and the amount is paid within 24 hours.
Loan against property:
The best loan against property can help you meet many financial obligations, such as balance transfer of an existing loan, debt consolidation, financing your child’s education, etc. Here, you must 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 must fulfill the mandatory eligibility conditions such as age, income, and employment. Further, your property must be located in a specified city, as the financial institution requires. 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 approval and disbursal process. But the best loan against property available on Finserv MARKETS provides for a quick online support and disbursal process.
Which loan is better?
There is no one answer when it comes to selecting between both loans. Both loans have their distinct features and benefits. Choosing a personal loan or a loan against property depends on your requirements, such as the required funds and repayment capacity. A personal loan could be better if you want urgent funds for an emergency. 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.
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. It is important to consider both types of loans’ features and benefits before zeroing in on the right kind of loan. It is important to consider both types of loans’ features and benefits before zeroing in on the right kind of loan. Alongside, always choose a trusted and reliable financial institution.