When you need funds—whether for a business expansion, child’s education, or medical emergency—both Personal Loans and Loans Against Property (LAP) are viable options. But which one is better for you?
Let’s compare both and help you make an informed choice.
What Is a Personal Loan?
A Personal Loan is an unsecured loan, meaning you don’t need to provide any collateral. It’s ideal for short-term needs and has:
Quick approval
Minimal paperwork
Higher interest rates (due to no security)
Use case: Emergency expenses, weddings, travel, etc.
What Is a Loan Against Property (LAP)?
LAP is a secured loan where you mortgage your residential, commercial, or industrial property to get funds. It generally offers:
Lower interest rates
Higher loan amounts
Longer repayment tenure
Use case: Business expansion, big-ticket investments, or long-term needs.
Key Differences Between LAP and Personal Loan
| Feature | Personal Loan | Loan Against Property |
|---|---|---|
| Collateral Required | ❌ No | ✅ Yes |
| Interest Rate | Higher (10–24%) | Lower (8–14%) |
| Loan Amount | Up to ₹25 lakh (approx.) | Up to ₹5 crore (depends on property value) |
| Tenure | Up to 5 years | Up to 15–20 years |
| Processing Time | Fast (1–3 days) | Longer (5–10 days) |
| Risk | No asset at risk | Property may be seized if not repaid |
When to Choose a Personal Loan
✅ You need quick money for short-term use
✅ You don’t want to risk your property
✅ You have a stable income and can handle higher EMIs
✅ You have a good credit score
When to Choose a Loan Against Property
✅ You own property and need a large sum
✅ You want lower EMIs due to long tenure
✅ You’re funding long-term expenses (education, business, etc.)
✅ You’re okay with longer processing time and documentation
Final Verdict: It Depends on Your Need and Asset
Both loan types are useful—but the better choice depends on:
How urgently you need the funds
How much you need
Whether you have a property to offer
Your repayment capacity