What Do Lenders Accept as Collateral for Loans?

Updated on: 16 Jan 2024 // 4 min read // Loan Against Property
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The requirement for funds has become part and parcel of modern lives. We live in a financially uncertain time, where we never know when any financial emergency might come up. No matter how hard you try to avoid these situations, it is virtually impossible to get rid of financial exigencies. Surely you have your savings to fall back on when required but using up your entire savings in one go is not recommended at all as it may expose you to further risks in future, without any safety cushion. In such situations, what you require is a reliable source of additional funding, which can be used to supplement your financial strength and help you take care of the expenses involved as well as future liabilities efficiently. If you own a property, residential or commercial, then it is effortless for you to access credit facilities. The most popular option that you have at your disposal is to Apply for a Loan Against Property. 

Apply for IDFC Loan Against Property

Loan Against Property

Loan Against Property (LAP), is a secured loan offered by various financial institutions in India. To avail this facility, you need to mortgage your property, residential or commercial, with the lender. The lender will offer you a loan based on the value of your property as well as your credit score. As it is a secured loan, the rate of interest against a Loan Against Property is significantly lower than that for a Personal loan. The repayment tenor available for a LAP may extend up to 20 years. The property would be mortgaged with the lender, but you can continue to use it for your own purpose. The charge of the bank on the property would be removed only after you have repaid the entire loan amount with interest.

In order to Apply for a SBI Loan Against Property, you can choose the online as well as the offline mode, as per your convenience. As the asset to be mortgaged is a property, the whole process may take a few days as the lender needs to be sure about your ownership and the title of the property. You need to submit all the documents as prescribed by the lender, including the property documents, when you apply for a LAP. Usually, if your profile meets the requirements specified by the lender, the whole process until disbursement of the loan shall take a few working days only.

What Do Lenders Accept for Collateral as Loans

When you seek a secured loan, such as Loan Against Property, lenders require you to furnish collateral to secure the amount being extended as a loan. If in case you fail to repay the loan amount on time, the lender reserves the right to sell off your collateral to recover the amount.

Apart from LAP, secured loans can be obtained against many forms of collateral. following are the various types of collaterals that are accepted by lenders against secured loans:

Residential or Commercial Property:

If you own residential property or commercial property, it is readily accepted by the lenders as collateral to secure a loan. The lender usually created a charge over the property which is removed only after you have repaid the entire loan amount. You can check the eligibility for Loan Against Commercial Property Online.

Fixed Deposits:

Fixed Deposit or FD is considered as a liquid investment tool,and most lenders accept fixed deposits as collateral against loans.

Life Insurance Policy:

If you have a life insurance policy, it is accepted by the lenders as collateral to safeguard the repayment of the loan availed.


Lenders accept automobiles such as cars, motorbikes, trucks, buses,and so on as collateral to secure the loan amount. The asset has to be hypothecated in the name of the lender to avail a loan.


If you have some gold ornaments or bullion in your possession, then you can mortgage it to avail a loan, or you can use it as collateral against your loan. Gold is considered a liquid asset and is readily accepted as collateral.

Accounts Receivables:

Lenders will readily accept your accounts receivables as collateral if you have taken a Business Loan. The value of the invoices outstanding should be more than or equal to the loan

Machinery and Equipment:

Machinery and equipment that are used in a factory can be pledged with the lender to avail a secured loan. The said asset is hypothecated with the lender to secure the loan amount.


Unsold inventory in the business premises can be used as collateral to avail a loan from the financial institutions. Secured loans offer an excellent way for you to raise some necessary funding to meet your financial commitments efficiently. Additionally, the rate of interest on secured loans is much lower than unsecured loans, reducing your interest expenses considerably. So, if you have collateral which is acceptable by a lender, then availing a secured loan is the best option for you.

Also Read: Is Using a Loan Against Property as a Business Loan a Smart Choice?

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 100+ Banks and NBFCs. We have served 5 million+ happy customers since 1989.

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