3 Reasons Why a Loan Against Property Trumps a Student Loan.

Every year, the cost of further education keeps increasing making it impossible for some to fund their plans based solely on their monthly earnings and the savings they have. In such cases, many young aspirants are forced to go in for a loan to fund their study plans.

Though this is a good idea, many potential borrowers often end-up confused between three common loan offerings. The first being and education loan, the second is a personal loan and last but not to be forgotten is the loan against property. And despite each having its unique benefits and cons, a loan against you home or property holds certain advantages over the other two.

These advantages will be explained below to help you make an informed decision between the three.

1. The level of funding up for grabs.

With an education loan, the extent of funding you receive will depend on a number of factors that determine your loan eligibility. Lenders will consider your previous academic track record, your entrance exams results, the course you wish to pursue, the college at which you wish to take admission, the kind of collateral you are offering, the financial capacity of your co-borrowers, so on and so forth.

With a personal loan too, your financial bearings will be evaluated, your credit score considered, your income noted and expenses mapped before arriving at a loan amount.

But with a loan against property, the loan amount is provided to you keeping in mind only and only the value of your property. Generally speaking, you will receive up to 60% of your property’s value as the loan amount. This can amount to substantial amount keeping in mind the value of property in India.

2. Interest rates of a loan against property.

The next best thing of a LAP is the cost at which it is made available to you, i.e. the interest rate. Student loans provide you interest rates between 10 and 16 percent. If you were to opt for a personal loan, you’d have to cope with rates ranging between 16 and 22 percent.

However, if you go in for a loan against your home or property, you can enjoy interest rates ranging between 9.50 to 11.60 percent. This should help you save considerable amounts of money over the tenure of the loan.

3. Speaking about tenures.

The length of you repayment window decides how high or low your EMI amounts are. Shorter tenures mean larger EMIs and trickier repayment processes. On the other hand, longer tenures mean smaller EMIs and convenient repayments.

A student loan should give you a maximum of 10 years to repay the loan, and up to 5 years with personal loan; but with a loan against property, you can get tenures as long as 15 years! This helps you with smaller monthly payments and easier repayments.

So there you have it, three basic features on which a loan against property trumps a student loan and a personal loan as well. We hope this article was helpful and guides you on your choice between the three. Good luck and study hard.