1.Lower Interest Rates: LAP generally offers lower interest rates compared to unsecured loans like personal loans or credit cards. This is because the loan is secured against the property, which reduces the risk for the lender.
2.Higher Loan Amounts: Since LAP is secured against property, lenders are often willing to offer higher loan amounts compared to other types of loans. The loan amount is typically based on the market value of the property pledged as collateral.
3.Longer Repayment Tenure: LAP usually comes with longer repayment tenures compared to other loans. This allows borrowers to repay the loan comfortably over an extended period, reducing the burden of high monthly payments.
4.Flexibility in End Use: The funds obtained through LAP can be used for a variety of purposes, such as business expansion, education expenses, medical emergencies, home renovations, debt consolidation, or any other personal or professional financial requirement.
5.No Restrictions on Property Usage: Borrowers can continue to use the property pledged as collateral for LAP during the loan tenure. There are no restrictions on its usage as long as loan repayments are made on time.
6.Potential Tax Benefits: In some cases, the interest paid on LAP may be eligible for tax benefits under certain sections of the Income Tax Act. Borrowers should consult with a tax advisor to understand the specific benefits applicable to their situation.
7.Quick Processing Time: If all documents are in order and the property is clear of any legal disputes, LAP processing can be relatively quick compared to other types of loans, providing quicker access to funds.
8.Improves Credit Profile: Successfully managing a LAP and making timely repayments can positively impact the borrower’s credit score, enhancing their creditworthiness for future financial transactions.
9.Competitive Market Offers: Due to the competitive nature of the lending market, borrowers can often compare offers from different lenders to find the most favorable terms and conditions for their LAP.
10.Diversification of Funding: For businesses, LAP provides an alternative source of funding that doesn’t require giving up ownership (as in equity financing), allowing businesses to maintain control and ownership while accessing liquidity.