Even if you are very elegant with money matters, there might be times when your funds are stressed and you may need a little assist to get over your fund needs. Though the first basis of financial help can be relations and friends, the truth is that still they cannot assist in case the required sum is large. In such cases, taking a loan is the most noticeable choice.
But when you have determined to take a loan, the next query is about which kind of loan you should take. The first alternative that comes to mind on of Personal Loan. But problem at this time is that the personal loan interest rates are very high - often to the tune of 11.49%. There is another option for those who have a property in their name. This option is to take a loan against existing property. The best part about the loan against property is that they have lower interest rates of 10.50% and have longer repayment tenures. Apart from this essential difference, few other factors make a decision whether you should take personal loans or go for loans against property.
One very significant factor is the sum of money requisite. If money required is more than Rs 25 lacs, then personal loans might not help. Personal loans are usually given for lesser ticket sizes and even the banks are reluctant to give high loan amounts due to the unsecured nature of these loans. In such cases, loan against collateral (property) is your most excellent bet.
One more decides factor is the importance of fund obligation. Generally, personal loans are processed rapidly and disbursed within a few days. Loan against Property on other hand; require the applicant to provide all original documentary proofs and approvals. The processing time is typically longer as the legal team of the bank has to physically verify and set up the property ownership. So in case of very vital needs, personal loans might be an improved choice.
The tenure you are eager to repay this loan in will also make a decision the type of loan you take. Personal loans are accessible for a period of 6 years or less while loan against properties are high-value secured loans that can be paid off in up to 10 to 15 years. But it’s worth noting that it also means that the longer you have a loan of more interest you will have to pay.
So make no doubt that you have impartially assessed your financial needs before deciding on which loans to benefit for your fund requirements. Also, these days, many online emi calculators for personal loan are obtainable. It might be value a try to use such tools to see the impact of changing interest rates on EMIs.
Finheal is writing blogs and articles on financial background.