LAP NPAs: Risk and Impact - CloudBankin – A digital loan software by Habile Technologies

NPAs are higher for LAP products than Home Loans, why is that?

Ans: When you buy a house, it is for your consumption. You borrow for the asset, and usually you don’t default on the loan.

Whereas in LAPs, you borrow against the asset and you leverage the collateral to get your loan.

Whenever you leverage a product, the associated risk becomes higher.

In many cases, the borrower may not place much of an importance on the product. They are ready to let go of the asset since it won’t harm their lifestyle/businesses.

Hence there is an increase in Non Performing Assets (NPA) even if its value is higher for LAP.

#lending #loan #LAP #Homeloans #manispeaksmoney

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