LAP Vs. Personal Loan : Which Is Right For Your Large Expenses?

When you need a large amount of money, maybe to grow your business, pay for a wedding, handle medical bills, or renovate your home, you usually have two loan options: a Loan Against Property (LAP) or a Personal Loan.

Both are useful in different ways, but choosing the right one depends on your financial need, urgency, and assets. BigMudra offers both LAP and Personal Loans, and in this blog, we will help you understand the differences so you can decide what’s best for your situation.

Table of Contents

What is a Loan Against Property (LAP)?

A Loan Against Property is a type of secured loan. You offer your property (like your house, flat, or land) as security to get a loan. BigMudra provides LAP at attractive interest rates and flexible repayment options.

Features of LAP from BigMudra:

You need to own a property.
The property stays with you, you are just using it as security.
You get a higher loan amount compared to unsecured loans.
Interest rates are lower because it’s a secured loan.

What is a Personal Loan?

A Personal Loan is an unsecured loan. This means you don’t need to give any security or collateral. It is ideal for urgent needs like travel, weddings, or medical emergencies.

Features of BigMudra Personal Loan:

No need to offer any property.
Quick approval and disbursal.
Fixed EMIs (Equated Monthly Installments).
Suitable for both salaried and self-employed individuals.

Key Comparison: LAP vs. Personal Loan

Let’s now compare both options based on important points like interest rates, loan amount, tenure, processing time, and suitability.

1. Interest Rates

BigMudra LAP: Interest rates for LAP are usually lower. Since it’s a secured loan, the risk for the lender is less.
BigMudra Personal Loan: Interest rates are higher compared to LAP. This is because it’s unsecured and riskier for the lender.

Tip: If you want to save money on interest and you own a property, LAP is the better option.

2. Loan Amount

LAP: You can get a higher loan amount, usually up to 60-70% of your property’s value. This makes it suitable for big expenses like business expansion or higher education.
Personal Loan: Loan amount is lower, usually based on your income and credit score.

Tip: If you need a large sum, LAP is the right choice.

3. Tenure (Repayment Time)

LAP: Comes with a longer tenure, usually up to 15-20 years. This makes EMIs smaller and easier to manage.
Personal Loan: Has a shorter tenure, usually 1 to 5 years

Tip: If you want smaller EMIs and more time to repay, go for LAP.

4. Processing Time

LAP: Takes more time to process because the lender needs to verify the property, do legal checks, and evaluate documents.
Personal Loan: Faster processing. With BigMudra, you can even get your personal loan approved in just a few hours.

Tip: If you need money urgently, a Personal Loan is better.

5. Eligibility and Documents

LAP: You must be the legal owner of the property. Documents like property papers, income proof, ID, and address proof are needed.
Personal Loan: You only need basic documents like salary slips, ID proof, address proof, and bank statements.

Tip: If you don’t own property, go for a Personal Loan.

6. Risk Factor

LAP: Since the loan is against your property, there is a risk, if you fail to repay, the lender can take possession of your property.
Personal Loan: No asset is at risk. However, defaulting affects your credit score.

Tip: Choose LAP only if you are confident about timely repayments.

When to Choose a LAP from BigMudra

You need a large loan amount
You have a property to mortgage
You want lower interest rates
You prefer a longer repayment period
Your need is not very urgent and you can wait a bit for approval

Example: You want to expand your small business and need ₹30 lakhs. You own a shop in your name. A LAP would work perfectly here.

When to Choose a Personal Loan from BigMudra

You need quick funds
You don’t want to risk your property
You need money for personal use like a vacation, wedding, or emergency
You want less paperwork
You can repay within 3-5 years

Example: You need ₹3 lakhs for your sister’s wedding, and the event is in two weeks. A Personal Loan is ideal here.

Final Thoughts

Both LAP and Personal Loans offered by BigMudra have their own benefits. The choice depends on your need, urgency, repayment ability, and whether you own property.

Here’s a quick summary:

Factor	Loan Against Property (LAP)	Personal Loan
Collateral	Required (Property)	Not required
Interest Rate	Lower	Higher
Loan Amount	Higher	Limited
Tenure	Up to 15-20 years	Up to 5 years
Processing Time	Slower	Faster
Risk	Property at risk	No property risk
Ideal For	Big, planned expenses	Urgent, smaller needs

Before applying, always check your repayment ability, and don’t borrow more than you can handle. BigMudra’s team is always here to guide you and help you make the right choice.