Ad­van­tages to the Bor­rower-Consumer

Consumer Voice - - Bfsi -

-Fi­nan­cial in­sti­tu­tions gen­er­ally en­cour­age this type of loan as they earn more loan in­ter­est here than in other loan prod­ucts. Th­ese loans are the safest bet for them as they are backed by se­cu­ri­ties and the amount of loan is al­ways less than the value of the prop­erty. In case of a de­fault, the prop­erty can al­ways be seized and sold to re­cover the money. (The av­er­age LAP ticket size is higher than a home loan; its ten­ure is also shorter than the home loan, with the for home loans. Typ­i­cally, the in­ter­est rate for LAP is loan rate.) -From the consumer’s point of view, such loans are pro­cessed faster than other tra­di­tional loan prod­ucts.

-Ti­tle deeds are bet­ter kept with fi­nan­cial in­sti­tu­tion than at home, as they pro­vide doc­u­ment se­cu­rity. Keep­ing them at home is risky due to bur­glary, fire, etc.

-Busi­ness­men/traders some­times face liq­uid­ity crunch in the money mar­ket. For them, loan against prop­erty comes cheaper than mar­ket bor­row­ings (at min­i­mum three per cent per month).

-The over­draft (OD) fa­cil­ity is a boon to the busi­ness class, as it com­ple­ments their in­come/ and again sub­ject to the over­all OD lim­its fixed. On top of that, in­ter­est is charged only on the amount utilised.

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