Types of Loans in India Should You Take
Have you ever come across the dearth of finances at any point in your life? If not, it means you have diligently planned out your finances in place. If yes, then you really need to start planning for your finances. Effective financial management is a part and a parcel of life especially for leading a stress-free life. If you have made enough savings and successfully kept some money aside to face emergencies, then it is not good that you keep on utilizing your savings every time during cash crises. It can pose doldrums for your future or retirement planning. Instead, go for bank loans as it can serve you as a great utility to take you out from such a situation.
Many banks and non-banking financial institutions have been there in the market that assists you in granting loans so that you have the power to overcome the crises.
Taking a loan is a big financial commitment that needs you to make some informed choices. With a variety of loans available in the market that offers attractive interest rates and repayment tenure, choose the one that makes the most of your requirements. Let's take a look at the common types of loans facilitated by the lenders in India.
A personal loan is an unsecured form of financing option available to the borrowers without any collateral. It is basically a multipurpose loan that can be utilised by the borrower for meeting their personal financial requirements such as paying medical bills, tuition fee expenses towards studies, wedding expenses, home renovation expenses, business expansion, foreign vacation, debt repayment etc. Many prominent banks and NBFCs extend personal loans for upto Rs. 40 lakhs for 5 years at attractive interest rates.
A home loan is a secured financing option extended to the customers by the financial institution for buying their dream home or residential property. You can Apply for a Home Loan against collateral security provided by the customers to their lenders. The loan amount obtained can be used for the construction and purchase of the residential property, for renovation , repairs and extension purposes. The maximum tenure for home loan repayment in India is upto 30 years, without any restriction on the maximum loan amount availed. Home loans are high priced loans that can be provided upto Rs. 5 crores.
A business loan is a credit financing option available to the small and medium enterprises; medium sized enterprises and large organisations to cover various expenditures in businesses. No mortgage is required to avail business loans. Some of the popular business loans available in India are Working Capital Loan, Machinery Loan, CC limit, Letter of Credit, etc.
Based on the type and purpose of the loan, business loans provided can be secured or unsecured financing options available to the business owners. The borrower can avail such loans in the form of Term Loans, Overdraft and Dropline Overdraft facility. However, there is no maximum limit to avail such loans while the repayment of business loans can go upto 15 years.
(4) Loan Against Property
Loan against property is a secured financing option extended to the customers by the financial institutions against the property mortgage. The customers are required to mortgage a commercial or residential property with their lender against obtaining the loan against property. The loan amount can be mobilised for any personal or business requirements by the customers.
Even the customers can avail the top-up loan against property offered to them by their lenders. Normally, the repayment tenure for LAP is 15 years without any restriction on the availability of the maximum amount.
A gold loan is a secured form of financing option available to the customers. The loans are availed against the mortgage of the gold jewellery or bullion with the loan provider. Normally, the lenders extend the gold loan amount of upto 75% of the market value of the gold. The repayment of such loans can be done via equated monthly instalments or paying the full amount at the time of maturity. So, there is no fixed repayments option available to the customer. However, the repayment duration differs from a few months to some years. The customers avail the amount of gold loan as per their requirements only.
Education loan is an unsecured form of financing option available to the student borrower to pay for their higher studies. The education loan amount availed can directly be transferred to the university or college as a fee paid by the student. The student needs to add a guarantor or a co-application while Applying for the Education Loan with the lender. The students are required to pay the interest during their study period while the loan repayment starts after one year of course completion or on securing the job.
Vehicle Loans are a secured form of financing option available to the borrowers for the purchase of a vehicle. The vehicle loans can be availed to purchase a car, scooter or motorbike or any commercial utility vehicle such as truck, vans, auto or tempo. The vehicle purchased is hypothecated with the lender until the loan amount is paid in full. However, the maximum repayment tenure for vehicle loans is of 7 years.
(8) Consumer Durable Loans
Consumer duration loans are the unsecured form of financing option available to the customers for buying several consumer products such as television, washing machines, mobile phones etc. The repayment period is of 2 years while no interest payment is applicable for availing such loans. However, no interest option is facilitated by some lenders not all. The customers can avail such loans both online and offline.
With a variety of loan options discussed above, simply go for the one that suits your requirements. Moreover, with flexibility in repayment options available with some lenders can give you sufficient time to plan for your repayments. This way, you can be at ease while taking care of other responsibilities as well.
