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Different Types of Loans Available in India
What is a Loan?
Taking different types of loans in India has always been a popular way to solve
financial issues. From addressing
medical, social and even personal expenses, loans have become essential rescue agents
for us in times of need. In this
article, you’ll learn about the different types of bank loans in India and everything
you need to know about them.
A loan is an amount borrowed from a financial organization to be returned at an agreed
period. Undoubtedly, the
importance of loans cannot be overemphasized. But it’s even more important to know that
there are different types of
loans for diverse needs.
Therefore, getting acquainted with all the different types of loans in India is the
first step to arriving at a
favourable end if you ever need to take a home loan. The different types of loans in
India are classified based on two
Concerning the need for collateral, loans are classified into secured loans and
These types of loans function with the need for collateral. Borrowers, on getting their
loans, are expected to offer
their assets as collateral to the financial organization they are borrowing from. These
assets stand as security for the
lender if the borrower never repays the loan.
There are so many types of loans that can be categorized as secured loans, and some of
Loan against property
is quite popular among many people or
at least people who are familiar with loans. However, when
it comes to loans against property, the borrower is expected to pledge any of their
properties before taking the loan.
If you have ever had a dream to own a home, here is a type of loan that focuses on
helping you build the home of your
dreams by availing of funds as much as you would want. In India, the varyinghome
loan types include:
It is a type of loan in India that allows the borrower to pledge gold jewellery in
exchange for the funds they seek to
have at the time. Gold loans are not that scarce in India even though they are the
type of loans people use to meet
short-term needs, unlike the loan against property which is more useful for
In India, there is also a provision to use one’s mutual fund investments as a loan
collateral. In availing of a loan
against mutual funds, you pledge the hybrid funds or equity to the financial
organization you will be borrowing from.
Your fixed deposit can also come in handy when trying to take a loan from any
financial organization. The loan can be 70
– 90 % of the fixed deposit value, and the loan tenor will last as long as the fixed
deposit tenor lasts.
These types of loans do not need collateral. Instead of being eligible to borrow based on
the value of your property,
you take a loan because of your financial history. So, if you ever want this type of
loan, you must ensure that your
financial history is untarnished. There types of unsecured loans include:
Just as the word ‘personal” implies, a personal loan is collected to cater for your
individual needs. And these needs
often range from debts to getting yourself something you want to taking care of
bills. Because of its peculiarity, a
personal loan is one of the most popular types of unsecured loans. Given its
unsecured nature, the interest rate for a
personal loan is higher in comparison with any secured loan.
This type of loan in India is also quite common. And it is often in different forms
as long as it sits under the
umbrella of a small business. It could vary from loans for traders, manufacturers,
service enterprises, working capital
loans, and machinery loans, among others.
As to how many more types of loans we have in India, we can also delve into another
category, which is the purpose of
the loan. The different types of loans in this category include the following:
To make the high costs of education achievable for every student, education loans are
made by every prominent lender. In
India, taking a student loan is the norm. Therefore, education loans help to cater
for necessities like school and
examination fees. Also, it covers the accommodation fee when necessary.
As far as education loan in India is concerned, the student is the primary borrower
while the parents or guardians serve
as the co-applicants.
Your dream to own a car or bike is shared by many. However, if you do not have the
money to buy it, it may
a reality. This is where a vehicle loan comes in: to give you the purchasing power
to make your dream come
To seek additional funding to aide in agricultural activities is seen recognised in
India and agricultural
been made available for such cases. It helps you readily meet your needs to buy
farming equipment, seeds,
insecticides, among other things.
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