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03 June 2011

Simple Comparison - Personal Loans and Home Loans

When you have to select the option of taking a home loan the very first question that comes in our mind is why not go in for a personal loan. This will be easily available and with less hassles. As well all know many financial loan lending institutions offer personal loans and that too at attractive interest rates then why go in for a home loan?
Research the internet and ask family members and friends especially those who have taken personal loans about the interest rates, the formalities and requirements for approval of such personal loans. Many institutions also offer personal loans at very short notice and even reputed private banks like the icici and other nationalized banks like State Bank offer personal loans. Here they see only the past financial history and track record of the individual borrower. Their credit card rating and income and assets are considered and immediately these loans are got without any hassles and personal loans are also termed very quick loans. The most important hitch here is about the interest rate with which these loans are offered. These are definitely more than any other loan rates. With a telephonic conversation an account holder or card holder can get a personal loan of certain amount, no questions asked, and that too within certain hours of time. 
If you need a quick loan then personal loans are the answer. Another important aspect here is that though you get the loan very fast and without any hassles you have less repayment period. You are given a time limit to repay the loan hence your EMIs will be on the higher side. This type of  quick personal loan is good for people who have financial backing or double income and can repay large sums as EMI keeping aside their monthly incoming money or salary for other household expenses. Here they get to repay the loan amount quickly and can own the property soon.
What about home loans and their interest rates? Documents are required and also processing time is more for approval of home loans as compared to personal loans. And we also know that administrative charges apply for home loans which the borrower has to arrange before approval of the loan. Home loans are the cheapest till date as compared to any other loan. Interest rates for home loans are still competitive and lower than any other loan. Here the borrower gets precious time and money to repay the home loan as the repayment tenure and EMIs are adjustable according to the individual borrower and their repayment capacity. EMIs are comparatively smaller than personal loans as the schedule for repayment falls in 10, 20 or 30 years depending upon the loan amount and the age of the borrower along with their qualifications and job status.
Both types of loans have their good points and bad points. Personal loans are very good when you have a tight crunch suddenly and can come out of this with some money immediately. So if you need cash right away then personal loans are the answer. But if you have to repay in installments and that too within your budget then home loans are better. In fact for buying a house, only home loans are the best option available till date. Personal loans are good for smaller amounts of money and when you have to spend crores for a flat then home loans are the best option to choose.

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