Thursday, February 22, 2024

Loans help you fulfill your monetary requirements without waiting to save for years. But with so many loan options available, it can become confusing for you to pick the best according to your requirements. A comparison between the two most popular loans against property and collateral-free loans will help you see which one to opt for. You can learn about various types of loan services and organizations that can help you a lot, on this website:

The concept of loans seems so simple. You need funds, you contact the lender, they approve your application, and you get funds. But when it comes to actual loan processings, the work becomes tricky because there are various types of loans. You need to pick the appropriate one if you don’t want the debt to eat your finances over time. To help you out, we have brought here five reasons why you should prefer a instant loan against property (LAP) instead of collateral-free loans. So you won’t end up making a mistake.

Reason 1: It Doesn’t Require Exceptional Credit History

As there is no collateral backed in personal loans, you need to have a clear credit history and a high credit score. It is the only thing that can assure the lender of your sincerity towards finances. But maintaining a credit score isn’t as easy as you may think. Plus, if you have made any mistake in the past, it will take years to correct it. You can avoid all this hassle and opt for LAP. It doesn’t require an exceptional credit history because the lender has an option of property to extract the money. Therefore, the processing is easy, and you can qualify easily.

Reason 2: It Provides Better Borrowable Amount

Collateral-free loans usually have a lower principal amount. As they don’t have a guarantee, they tend to analyze your income-to-debt ratio and determine the amount that you can borrow. On the other hand, you can easily borrow higher amounts with the help of a LAP. Its amount is decided on the basis of the current value of the property. Therefore, the principal is significantly higher in this. In case you are worried about your property going into risk, you should consider borrowing only the required amount. So you will be able to repay it conveniently.

Reason 3: It Offers Lower Interest Rates

Interest rates of a lender depend upon the security of the borrowed funds. For example, you are a secure borrower if your credit score is high. Thus, you are entitled to receive better interest rates as compared to those with a bad credit score. Similarly, the security of collateral matters as well. As there is no asset security in collateral-free loans, the offered rates are higher. Contrastingly, loan against property interest rate is much lower. So your EMIs are of fewer amounts, and you need not pay excess interest.

Reason 4: It Has Lower Processing Fee

You need to pay a specified amount of money at the time the loan is processed. This plays a crucial role, even though the percentage of processing fee is quite small. That is why it can serve as a deciding factor for you. LAP processing charges are comparatively lower than the collateral-free loans. Therefore, you need to pay an excessive amount in it, and you receive an overall higher principal amount.

Reason 5: It Can Be Borrowed For A Longer Tenure

The tenure of your loan helps you reduce the per month EMIs, and hence, your worries are reduced. But personal loans can’t be borrowed for longer tenures. Therefore, they have higher EMIs. In case your income is low, there is no chance you can get a significant amount from a personal loan. Even if you get it with a higher income, a lot of funds will be gone into EMIs. To avoid this problem, you can opt for a LAP. Along with lower loan against property interest rates, you also get a longer tenure to pay for it. Therefore, you get a double advantage on the EMIs.


A larger sanction, lower interest rates, longer tenure, less processing fees, and no credit history hassle, these reasons are enough for anyone to understand how LAP is better than collateral-free loans. Along with these, you may also get some tax benefits depending on the purpose of your loan.


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