Personal loans are often referred to as all-purpose loans. They come in handy for sudden expenses for which you may not have ready cash.
If you can spend a little more time in processing and documentation, a cheaper loan than personal loan is a loan against property (LAP). LAP is a personal loan given by mortgaging your house property. The loan is given as a certain percentage of the property’s market value, usually around 40%-60%. LAP interest rates are cheaper by 3% to 4% compared to personal loan rates.
|Personal loan||Loan against Property (LAP)|
|An individual can take a personal loan for personal usage without any security or guarantor||The individual takes the loan by mortgaging the house property.|
|Higher interest rates compared to LAP||One of the cheapest retail loans after home loans.|
|Maximum loan eligibility is determined primarily by an individual’s income.||Maximum loan eligibility is determined primarily by the value of the property and income.|
|Maximum loan tenure for personal loan is up to 5 years (60 months)||Maximum loan tenure for LAP is up to 10 years (120 months)|
|Unsecured loan||Secured loan|