Credit Card Loan vs. Loan Against Property: Which is Better?

To do justice to your personal and professional responsibilities you may have to avail a loan at some point in time. While more people are comfortable with using credit to increase their purchasing power and realise goals, it is important that you choose your source of credit carefully. Not all forms of credit are equal and to ensure that you have a positive experience, you must pick the variant that suits your needs.

For example, if you are confused between a credit card loan and a loan against property, it is important to compare their interest rate, tenor and eligibility, among other factors. In case for a credit card loan, for example, you can avail it only if you have a credit card. In case of a Bajaj Finserv Loan Against Property, however, a salaried individual as well a self-employed person can avail a loan. While a credit card loan can be restrictive in terms of the amount you can borrow, a loan against property allows you to borrow large amounts in one go or in instalments as per your needs.

Here is a closer comparison between a loan against property and a credit card loan to help you make an informed decision.

Amount you can Borrow
The amount you can borrow with a credit card loan depends on the credit limit that has been set for you. For example, if you need to borrow Rs.2 lakh but your credit limit is only Rs.1.5 lakh, you will not be able to get the amount you need. With a loan against property, however, you are able to avail larger sums of money because you have put up your house as collateral and secured the loan. With Bajaj Finserv’s Loan Against Property, for example, as a salaried individual you can borrow up to Rs.1 crore, while as a self-employed individual you can borrow up to Rs.3.5 crore depending on the value of the property. You can also enjoy a repayment tenor of up to 20 years as well as minimal pre-payment and foreclosure charges. Therefore, this type of loan comes in handy for any larger expenses that you may have, such as buying software for your business, for instance.

Ease of Application
If you already have a credit card getting a loan on your credit limit becomes a much easier process and you won’t be saddled with copious paperwork. However, when you take a loan against property you will have to complete certain formalities. So the key is to pick a hassle-free loan such as Bajaj Finserv’s Loan Against Property, where you can apply online in minutes, and you only have to submit minimal documentation to access funds.

Low Interest Rates
While interest rates on credit card loans tend to be on the higher side, usually between 15% and 21%, the rates you get with a loan against property are much lower. To ensure that you get the best deal possible, make it a point to explore various lenders and pick a loan that offers you the lowest interest rate.

Also Read: Consolidate Credit Card Debts with Mortgage Loans

Pay Back at your Convenience
There is an urgency with which you must repay your credit card loan because unless you pay it back, you won’t be able to use your card completely. This is because your credit limit is blocked as soon as your loan is approved, and it is unblocked as and when you repay it. With a loan against property, on the other hand, repayment is much more relaxed. With Bajaj Finserv for example, salaried individuals can pay back the loan over a period of 2 to 20 years.

So keep these differences in mind and choose from between the two options. If a high-value, low-interest loan is a must, a loan against property is your best bet.

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