Loan Against Property
When it comes to choosing between a Loan Against Property and a Business Loan, things can get confusing. But if you're looking for flexibility, ease, and value for money, Loan Against Property (LAP) is a perfect choice. In this blog, we'll break down the differences between Loan Against Property and Business Loans and help you choose the right one. Read on!
A Loan Against Property is a secured loan that allows you to borrow funds against the value of your property, whether residential or commercial. The property serves as collateral, providing security to the lender and enabling you to access higher loan amount at favourable interest rates. Loan Against Property offers flexibility in fund utilisation, making it an ideal financing solution for various purposes, including business expansion, debt consolidation, education expenses, and more.
Business Loan is a form of financing specifically tailored to meet the needs of businesses and entrepreneurs. Business Loan can be used to fund a wide range of business-related expenses, such as working capital, equipment purchase, inventory management, marketing initiatives, and expansion projects. While a Business Loan offers flexibility and accessibility, it often comes with stringent eligibility criteria and higher interest rates compared to a Loan Against Property.
Loan Against Property vs. Business Loan: Which is Better?
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Basis |
Loan Against Property |
Business Loan |
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Loan Amount |
Loan Against Property typically offers higher loan amounts compared to business loans, as the value of the property serves as collateral, enabling you to access funds based on the property's market value. |
Business Loan may have lower loan limits, as they are often determined based on the borrower's business revenue, creditworthiness, and financial projections. |
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Flexible Use of Funds |
Loan Against Property provides flexibility in fund utilisation, allowing you to use the funds for various purposes, including personal expenses, debt consolidation, business expansion, and more. |
While Business Loan are specifically designed for business-related expenses, they offer limited flexibility in fund usage compared to Loan Against Property.
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Interest Rate |
Typically comes with lower interest rates compared to unsecured loans, due to the presence of collateral, which mitigates the lender's risk. |
Business Loan often have higher interest rates compared to Loan Against Property, as they are unsecured loans and pose a higher risk to lenders. |
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Repayment Tenure |
It offers longer repayment tenures, allowing you to extend loan payments period, resulting in lower monthly instalments and affordability.
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Business Loan may come with shorter repayment tenures, as compared to Loan Against Property.
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When comparing the Loan Against Property and Business Loan, both are winners. Loan Against Property is secured and offers higher loan amounts, flexible fund utilisation, lower interest rates, longer repayment tenures. Whereas a Business Loan is unsecured and comes with a lower loan amount and higher interest rates when compared to Loan Against Property.
