Quick Comparison of Loan Against Property Interest Rates
Most of us face financial difficulties at some point in life. Sometimes, the money needed is low enough to borrow from friends and family but there are those rare situations when you need a large fund to solve your problems. In times like these, loans could be a good option to beat that cash crunch. There are several types of loans available these days. One among them is a Loan against Property, also known as LAP. This is a secured loan that offers you good interest rates.
To know how to get loan against property, you first need to understand it better. Here some points are illustrated which will better describe what is LAP is, and what are the factors that can affect your Loan Interest Property interest rates.
Understand Loan against Property (LAP) better
They say owning a property is the best investment. It gives you a space to live in or conduct a business, generate rental income and even take a loan against it someday.
If you own a property of any kind, you can pledge it as security for a loan. Whether it is a medical emergency, a marriage in the family, or higher education fees, you can use the loan amount to fund your situation.
Both banks and Non-Banking Financial Companies (NBFC) offer loan against property. They grant it for residential as well as commercial properties.
It could be the home you live in, a rented property, a vacant property or even a land you own. You can take a loan against any of these properties and repay it through monthly EMIs.
The USP about taking a loan against property is the interest rate. The loan against property interest rates is lower than most other types of loans, including a personal loan that could also be used to fund emergencies.
Every bank and NBFC has different interest rates. The average interest rate ranges anywhere between 10 % to 20%.
It is the most important thing to keep in mind when taking a LAP. A loan against property interest rate comparison will help you pick the best deal for yourself.
The following are the loan against property interest rate slabs of a few popular banks and Non-Banking
Financial Companies. However, the actual rate you get will be influenced by several factors.
Factors that affect Loan against Property Interest Rates
- Repayment Capabilities
The loan amount and interest rate offered to you will depend on your monthly salary. The lender will analyse your repayment capability before lending the amount.
- Type of Interest Rate
There are two types of loan against property interest rates— fixed and floating interest rates. There are many differences between fixed and floating interest rates.
As the name suggests, a fixed rate loan is where the interest rate does not change with every single market fluctuation.
On the other hand, floating rates vary according to market conditions. Another fixed and floating rate difference is that the fixed rate is usually 1-2.5% points higher than the floating rate.
Picking between the two will affect your EMI amount and your repayment plan. You can read more about these two types of interest rates here.
- Loan Tenor
Unlike personal loans or car loans, LAPs offer a longer tenor. This means you get the option to pick lower EMIs with longer tenor. However, a longer tenor also results in higher interest payment.
CIBIL Score
A good CIBIL score not only ensures you get the loan but also affects the interest rate of loan against property. Many banks have stringent rules when it comes to the applicant’s CIBIL score.
However, NBFCs like Bajaj Finserv are a little more lenient and could consider you for a better interest rate even if you don’t match their CIBIL criteria. If you negotiate well, they have the capacity to offer you competitive interest rates.
Conclusion
The interest rates of LAPs are among the lowest interest rates offered on loans. When you take a loan against property from an NBFC, you further have the option to negotiate the deal.
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Category: Loans
