What is a Loan?
A loan is an amount borrowed from a financial institution to be repaid in monthly instalments within an agreed period. They are designed to help address expenses and bridge the gap you may experience in terms of funds. Therefore, getting acquainted with all the different types of loans is important before you avail of any one of them.
The different types of loans in India are classified based on two factors, namely secured and unsecured. Read on to learn about them.
Different Types of Loans in India
From addressing medical, social, or even personal expenses, loans have proved to be an essential tool in times of financial contingencies. In present-day India, those in dire need of funds will have several loan options to select from, to best address their financial needs. Knowing the different types of loans available in India is not just for academic purposes; should you ever need a specialised loan – you will know which to pick to maximise the benefits of the credit tool.
The two broad categories of loans available in India are the following:
-
Secured Loans
These are the types of credits where you need to collateralise your property or jewellery when applying for a loan. In this type of credit, lenders have a low risk of default from the borrower as they can always sell off the collateral to recover the loan amount.
-
Unsecured Loans
For this type of credit, borrowers do not have to collateralise their property or jewellery. However, it is mandatory to have a good CIBIL score, at least beyond 750. Otherwise, lenders might not approve their loan application.
Different Types of Secured Loans in India
Secured loans are sanctioned against a collateral or security. Borrowers are expected to offer their assets as a collateral to the financial organisation they are borrowing from to receive the loan amount they desire. These assets stand as security for the lender if the borrower fails to repay the loan.
Following are some of the popular secured loans you can avail of:
-
Loan Against Property
A Loan Against Property is a preferred financial product. Borrowers pledge their property against which they stand to receive sizeable sanctions that they can use to address housing or business-related expenses. -
Home Loan
Home Loans focuses on helping you purchase a property by extending sizeable funds. In the case of a Housing Loan, the collateral in question is the property being purchased. The ownership of the property is transferred to the borrower upon full repayment. -
Gold Loan
Gold loans allow borrowers to pledge gold jewellery in exchange for funds. Typically, a gold loan is utilised to meet short-term needs. -
Loan Against Mutual Funds and Shares
Loans against mutual funds and shares offer similar provisions, where one uses their mutual fund investments or shares as loan collateral. -
Loans Against Fixed Deposit
Your fixed deposit can also come to your rescue when you want to take a loan from any financial organisation. The loan can be 70–90% of the fixed deposit value, and the loan tenure will last as long as the fixed deposit tenure lasts.
Different Types of Unsecured Loans in India
Unsecured loans do not require any collateral for loan approval and disbursal. Such loans are extended based on one’s financial history. So, if you ever want this type of loan, you must ensure that your credit profile is healthy.
-
Personal Loan
A personal loan can be availed of to cater to your individual needs. Due to its vast range of usage and no end-use restrictions, a personal loan is one of the most preferred unsecured loans. However, given its unsecured nature, the interest rate for a personal loan is relatively high compared to secured loans. -
Business Loans
Short-term business loans are quite common in India and come in different forms, such as loans for traders, manufacturers, service enterprises, working capital loans, and machinery loans. These are designed to help business owners fulfil their urgent financing needs. -
Education Loans
Education loans act as monetary assistance for students who need to meet expenses associated with higher studies. The student is the primary borrower, while the parents or guardians serve as the co-applicants. -
Vehicle Loans
Vehicle loans are widely sought in India, given the demand for automobiles in the country. These loans come at competitive interest rates with easy-to-meet parameters. -
Agriculture Loans
Agriculture loans are extended to those who seek to fund their seasonal farming activities, such as the purchase of land or machinery, horticulture projects, and more. The repayment tenure and eligibility criteria differ depending on the end use of the funds. -
Flexi Loans
Flexi loans are handy for those individuals who prefer a more flexible disbursal plan, wherein, they borrow how much they need, and pay interest only for the amount consumed. This is cost-effective and a choice for many borrowers who require cash at a short notice.
-
Credit Card Loans
Credit card loans are essentially loans offered against one’s credit card. The loan repayment is usually linked to the user’s monthly credit card bill and is disbursed without hassles – as the lender will already have all the required information.
Read Also: Hybrid Flexi Loan v/s Personal Loan
The Differences Between Secured and Unsecured Loans
Point of Difference | Secured Loans | Unsecured Loans |
---|---|---|
Collateral | Collateral is required | Collateral is not required |
Interest Rates | Interest rates are comparatively lower than unsecured loans | Interest rates are higher compared to secured loans |
End-usage Restrictions | There are restrictions on end-usage with the exception of certain loans (gold loans, loans against mutual funds or FDs) | Usually, there are no such restrictions except for unsecured education loans |
Maximum Loan Amount | A certain percentage of the collateral’s assessed value. | It is usually based on the applicant’s income, credit score, loan type and other eligibility parameters. |
Credit Score Impact | Medium to low-impact | The impact is very high |
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
Frequently Asked Questions
Personal loans typically have higher interest rates compared to other types of loans due to their unsecured nature. Since personal loans are not backed by any collateral, such as property or assets, lenders assume a higher level of risk. To compensate for this risk, lenders often charge higher interest rates on personal loans.The absence of collateral means that if a borrower defaults on a personal loan, the lender has no specific asset to recover the outstanding amount. This increases the risk for the lender and leads to higher interest rates as a way to mitigate that risk
Yes. In order to meet your business funding requirements, you can take a cash loan. Cash loan refers to a loan which is received by a borrower in cash. These loans are typically unsecured, meaning they do not require collateral such as a house or car to secure the loan. On the other hand, you can also apply for a business loan online. However, it's important to note that cash loans often come with high interest rates and fees, making them an expensive form of borrowing.
Yes, it is possible to get a loan if you are self-employed in India. Many banks and financial institutions offer loans specifically designed for self-employed individuals. However, the eligibility criteria and documentation requirements may vary from lender to lender. It's advisable to contact various banks or financial institutions to understand their specific requirements and evaluate the loan options available to you as a self-employed individual in India. Additionally, maintaining a good credit history, strong financial statements, and a well-documented business can improve your chances of obtaining a loan.
A demand loan is a type of loan that allows the lender to request full repayment at any given time. Both the lender and the borrower are aware of this condition from the beginning. This arrangement offers benefits to both parties involved. Lenders appreciate the ability to demand repayment, whether it is to pursue alternative investments or to recover the principal amount. Borrowers, on the other hand, value the convenience and flexibility that demand loans offer. They can repay the loan, either in full or in part, at any time without incurring any penalties.
A term loan is a financial product that involves the lending of a specific amount of money to an individual or business for a predetermined period of time, typically ranging from one to ten years. The borrower is required to repay the loan amount along with the agreed-upon interest within the specified term. There are four types of term loan – short-term term loan, intermediate term loan, long-term term loan and special commitment term loan.
Trending Articles

[N][T][T][N][T]
Smart Ways to Fund and Plan Your Summer Home Renovation2025-06-09 | 4 min

[N][T][T][N][T]
How Economic Shifts Affect Home Loan Rates2025-06-09 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Smart Ways to Understand and Use a Home Loan EMI Calculator2025-06-09 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Home Loans: Smart Financing with Long-Term Benefits2025-06-09 | 3 min

[N][T][T][N][T]
Benefits of Home Loan Interest Rate Conversion: Explained2025-06-09 | 4 min

[N][T][T][N][T]
Understanding Home Loan Subsidies2025-06-06 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Is Prepaying Your Home Loan the Right Move?2025-06-06 | 3 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Loan Against Property vs. Personal Loan: Which Should You Choose?2025-06-06 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Factors to Consider Before Opting for Home Loan Balance Transfer2024-06-21 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Five Important Factors to Keep in Mind When Prepaying Your Home Loan2023-01-17 | 6 min

[N][T][T][N][T]
How Is a Loan Against Property Processed?2024-02-05 | 6 min

cibil Cibil
[N][T][T][N][T]
Tips to Maintain Your Business CIBIL Score Above 7002024-02-02 | 5 min

tax Tax
[N][T][T][N][T]
How to Avail of Tax Benefits on a Loan Against Property2024-06-13 | 5 Min

tax Tax
[N][T][T][N][T]
8 Different Ways to Avail of Tax Benefits on Home Loans2023-03-03 | 4 min

home+loan Home Loan
[N][T][T][N][T]
ITR Filing for Home Loan – Know the Right Process to File Your Income Tax Returns2024-02-16 | 5 min

home+loan Home Loan
[N][T][T][N][T]
10 Factors That Affect Your Home Loan Eligibility2024-05-21 | 7 min

home+loan Home Loan
[N][T][T][N][T]
Understanding CIBIL MSME Rank: What it Means for Your Business Loan Application2025-05-30 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Rising Home Loan Interest Rates: Impact on First-Time Homebuyers2025-06-03 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Know About CTS Number When Buying a Property in Mumbai2025-03-04 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Estimating Your Monthly Outgo on a Rs.1 Crore Home Loan2025-05-30 | 3 min

home+loan Home Loan
[N][T][T][N][T]
How Can You Get a Place of Your Own When Living in a Metro City?2025-05-30 | 3 min

[N][T][T][N][T]
Home Loan ROI Explained: What it Means2025-05-30 | 5 min

[N][T][T][N][T]
What are Tranche Disbursement and Tranche EMI in Home Loans?2025-03-14 | 5 min

home+loan Home Loan
[N][T][T][N][T]
How to Top Up your Home Loan2025-03-04 | 3 min

[N][T][T][N][T]
7 Smart Ways to Optimise Your Home Loan Interest Repayments2025-04-03 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Understanding Home Loan Processing Time: What to Expect and How to Prepare2025-04-14 | 3 min

home+loan Home Loan
[N][T][T][N][T]
5 Great Ways Women Can Benefit from Taking a Housing Loan2024-01-16 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Tips to Secure Quick Home Loan Approval2025-03-03 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Consider These Factors Before Foreclosing Your Home Loan2024-04-16 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Pre-EMI or Full EMI: Understanding Home Loan Repayment Options2025-01-16 |

home+loan Home Loan
[N][T][T][N][T]
How Much Home Loan Can I Get? A Guide for First-Time Borrowers2025-04-07 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan for Self-Employed Individuals2025-03-03 | 2 min

[N][T][T][N][T]
Smart Ways to Pay Off Your Home Loan Faster2025-04-01 | 6 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan Prepayment: Everything You Need to Know2025-04-07 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Smart Home Loan Planning After 45: Tips and Strategies2025-05-13 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Need More from Your Home Loan? Here’s How You Can Optimise I2025-05-07 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Understanding How Home Loan Interest Rates Are Determined2025-05-12 | 5 min

home+loan Home Loan
[N][T][T][N][T]
An Essential Guide to Refinancing a Home Loan2024-04-22 | 5 Min

home+loan Home Loan
[N][T][T][N][T]
Understanding RERA in Real Estate: Meaning, Full Form, and Benefits2025-02-16 | 2 min

home+loan Home Loan
[N][T][T][N][T]
MPIGR Madhya Pradesh: A Guide to Property Registration and SAMPADA Services2025-04-14 | 2 min

home+loan Home Loan
[N][T][T][N][T]
A Guide to Applying for DTCP Approval for Patta Land Online2025-01-13 | 6 min

home+loan Home Loan
[N][T][T][N][T]
Khasra Number Explained: How to Find It2025-01-03 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Gift Deeds: A Comprehensive Guide to Registration and Documentation2025-01-29 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Understanding Bigha in India: Convert 1 Bigha to Square Feet, Acres, and Hectares2025-01-31 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan Pre-Closure: Is it the Right Step for You?2025-05-29 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Understanding APF Number and Its Role in Home Loan Applications2025-01-07 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding Repayment Terms for Loans Against Property2025-05-29 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Smart Steps for Purchasing Property from an NRI: A Guide2025-05-29 | 3 min

home+loan Home Loan
[N][T][T][N][T]
What Does It Mean to Be a Guarantor? Understanding Roles and Responsibilities2025-05-28 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Understanding Home Loan Fees and Charges in India2025-05-28 | 3 min

[N][T][T][N][T]
Understanding EMI Allocation Within Your Salary2025-05-28 | 3 min

[N][T][T][N][T]
Is a Down Payment Mandatory for a Home Loan in India?2025-05-27 | 3 min

[N][T][T][N][T]
How to Buy a Home Securely under MahaRERA2025-05-27 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Valuation of House: A Comprehensive Guide for Homeowners in India2025-05-27 | 2 min

[N][T][T][N][T]
Factors That Affect Your Loan Against Property Eligibility2025-05-26 | 3 min

[N][T][T][N][T]
Why Loan Against Property Can Be an Ideal Choice for Funds2025-05-27 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Freehold vs. Leasehold Property: What You Need to Know2025-05-27 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Transferable Development Rights (TDR): Understanding the Concept2025-02-12 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Buying a Home: Understanding the 'No EMI till Possession' Scheme2025-03-19 | 2 min

home+loan Home Loan
[N][T][T][N][T]
PMAY Urban 2.0: Guidelines for Affordable Housing in India2025-01-29 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Ways to Check RERA Registration Status of Real Estate Projects2025-03-20 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
A Guide to Calculate Loan Against Property EMI2025-01-08 | 2 min

[N][T][T][N][T]
Relinquishment Deed: Meaning, Format, and Documents Required2025-03-19 | 3 min

home+loan Home Loan
[N][T][T][N][T]
How to Get a Top-Up Loan After Transferring Your Home Loan2025-05-23 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Floor Space Index (FSI): Meaning, Calculation, and its Importance in Real Estate2025-03-20 | 2 min

home+loan Home Loan
[N][T][T][N][T]
BBMP: Full Form, History, and Role in Bangalore’s Governance2025-03-20 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Everything You Need to Know About a Co-Applicant in a Home Loan and Tax Benefits2025-03-14 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Should You Take a Home Loan Even If You Have Enough Money to Buy a House?2024-01-30 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Property Search Guide for First-Time Homebuyers2025-05-20 | 3 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Loan Against Property: A Balanced Approach to Financing2025-05-20 | 3 min

tax Tax
[N][T][T][N][T]
How to Reduce the Loan Against Property Interest Rate?2023-12-11 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Making the Shift: Benefits of Moving from Pre-EMI to Full EMI in a Home Loan2025-05-20 | 4 min

cibil Cibil
[N][T][T][N][T]
Loan Rejection Impact on CIBIL Score2024-12-23 | 3 min

home+loan Home Loan
[N][T][T][N][T]
How to Pay Off Your Home Loan Quicker2024-03-11 | 4 Min

[N][T][T][N][T]
NRI Home Loans: 5 Things to Keep in Mind Before Applying2024-02-15 | 4 min

[N][T][T][N][T]
7 Benefits of Taking a Home Loan in India2024-06-19 | 3 min

cibil Cibil
[N][T][T][N][T]
Everything You Should Know About Your CIBIL Score2024-02-09 | 7 min

home+loan Home Loan
[N][T][T][N][T]
How to Calculate Home Loan EMIs2022-06-14 | 5 Mins

home+loan Home Loan
[N][T][T][N][T]
How to Pick the Best Home Loan Tenure that Suits Your Budget2023-06-29 | 5 min

cibil Cibil
[N][T][T][N][T]
Does CIBIL Score Affect Loan Against Property Eligibility?2023-02-15 | 7 min

home+loan Home Loan
[N][T][T][N][T]
Secured vs Unsecured Loan - Know the Difference2023-08-24 | 2 min

loan+against+property Loan Against Property
[N][T][T][N][T]
5 Important Reasons to Opt for a Loan Against Property to Start Your Own Business2023-02-10 | 2 min

cibil Cibil
[N][T][T][N][T]
Ways You Can Improve your Credit Score for a Small Business2023-03-01 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan for Self-Employed: Three Steps to Improve Your Approval Chances2025-03-12 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Everything You Wanted to Know About Loan Against Property2023-12-16 | 5 Min

loan+against+property Loan Against Property
[N][T][T][N][T]
Step-by-Step Process How to Apply for a Loan Against Property2024-03-05 | 4 Min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Fees and Charges on Your Loan Against Property2024-02-16 | 8 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Top Benefits of a Loan Against Property Over Collateral-Free Loans2024-01-09 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Understanding the Benefits of a Home Loan EMI Calculator2023-07-12 | 5 min

cibil Cibil
[N][T][T][N][T]
Minimum CIBIL Score for Business Loans2023-04-17 | 5 min

cibil Cibil
[N][T][T][N][T]
Reasons to Maintain a Positive Credit Profile and a High CIBIL Score2023-03-01 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Why Professional Loans Against Property Are Financially Beneficial?2023-03-03 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan EMI Calculator Benefits and It’s Features2024-02-21 | 4 min

[N][T][T][N][T]
What is the Purpose of CIBIL Score?2023-03-25 | 4 min

cibil Cibil
[N][T][T][N][T]
Importance of CIBIL Score & Tips To Improve It2023-02-21 | 5 min

home+loan Home Loan
[N][T][T][N][T]
Smart Things to Consider Before You Apply for a Home Loan2022-12-14 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Why Loan Against Property Can be a Good Credit Option for a Startup Business?2023-12-22 | 5 Min

home+loan Home Loan
[N][T][T][N][T]
Understanding Sale Deed in Home Loans: Why It Matters2025-05-12 | 2 min

home+loan Home Loan
[N][T][T][N][T]
Reasons Why a Housing Loan Application May Be Rejected2024-02-14 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Top 5 Home Loan Benefits for First-time Woman Buyers2024-05-14 | 5 min

home+loan Home Loan
[N][T][T][N][T]
How to Choose the Best Home Loan?2023-08-09 | 4 min

home+loan Home Loan
[N][T][T][N][T]
Tips to Avoid Rejection of Your Home Loan Application2023-08-01 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Home Loan for Rs.70,000 Salary: How Much Can You Borrow?2025-03-18 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Home Loans for Salaried Employees: Eligibility, Documents, and Application Process2025-03-18 | 3 min

[N][T][T][N][T]
Home Loan for Pensioners: Eligibility and Benefits2025-03-11 | 3 min

tax Tax
[N][T][T][N][T]
How Much Tax Can be Saved Under Sections 80C, 80D, and 80G?2024-05-15 | 5 min

home+loan Home Loan
[N][T][T][N][T]
What is the Ideal Age to Buy a House?2025-03-19 | 2 min

tax Tax
[N][T][T][N][T]
Difference Between Old vs. New Tax Regime2024-08-22 | 5 min

loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Mortgage Loan Underwriting Process: What You Should Know2025-05-12 | 3 min

[N][T][T][N][T]
5 Benefits of Availing of a Home Loan at an Early Age2024-05-10 | 3 min

home+loan Home Loan
[N][T][T][N][T]
Benefits of a Home Loan2023-02-20 | 4 min

cibil Cibil
[N][T][T][N][T]
Here’s What You Can Do to Improve Your CIBIL Score