Over the years, loans have always proven to be essential support in our day-to-day life. Loans can be used to support our personal needs, child's education, business start-ups, etc. If you are staying in India and you wish to apply for any loan, then you need to know about the different types of loans in India, and from where you will get it. In this content, you will learn about these topics in the following segments.
First of all, you need to know about the sources of these loans. The sources can be divided into two categories- secured and unsecured. Secured loans are those which are being provided in exchange for specific kinds of properties being mortgaged. Unsecured loans are being provided based on the applicant's history and creditworthiness. When you look into the types of secured loans in India as well as types of unsecured loans in India, you will come across different types of bank loans and loans from other private money-lending institutions.
The types of bank loans in India are:
Home loans are granted to people who wish to spend it for construction of their houses, renovation, extension, buying of land or property, or for payment of stamp duties. Most home loans come with fixed or adjustable interest rates and payment schemes. Home loans are also made available for NRIs.
Personal loans are being provided to people who need it for personal reasons. They can be utilized for any purposes like marriage expenses, paying debts, making purchases, and even vacation expenditure. You do not need to show any collateral security if you wish to apply for this loan. This loan generally ranges from 12 months to 5 years and comes with varied interest rates depending on the source of the money lenders. You need to pay a loan processing fee at the beginning, and the EMIs starts once the loan is being processed.
A business loan is being provided to support an existing business or to start a new business. The availability of such loans depends on the individual's credentials, the turnover of the current business, and the prospects and feasibility of the new business. One has to present with an attractive and logical business plan to attract the banks. The banks will then look into the background of the applicant, their property/assets, their previous loan history to evaluate the ability to repay the loan. Insuring one's property for business purposes is an added benefit. Existing business gets supported by loans for a business extension, for venturing into additional grounds and for building up security for emergencies.
To support your child's education, you sometimes have to resort to loan applications, especially when your child aspires to go to a prestigious institution or travel abroad. Educational loans take care of the educational fees, travel expenses, cost of books and equipment, insurance of students, and additional expenses to support a thesis, tours, project works, etc. The rates of interest for such loans are simple, and some banks also provide concessions. The repayment tenure is generally ten to fifteen years, beginning about six months to two years from the completion of the course. The repayment does not come with additional charges.
Gold loans are loans provided in exchange for gold being kept as security. This loan is considered to be amongst the safest since the amount offered depends on the security being submitted. The tenure of repayment depends on the bank, where some banks also have the provision of tenure extension. The EMI policies also vary from bank to bank, where some banks prefer to charge the interest and the principal every month while others choose only the interest to be charged monthly.
Vehicle/Car loans are provided to support the purchase of cars and other vehicles. The procedure is simple and requires less paperwork. It also takes lesser time than other loan application processes, generally around three to six working days, to get the clearance. The most repayment process is structured every month.
If you have an insurance policy, then you can apply for any loan against it. The amount of loan that you can apply for depending on the type of policy and the period for which it is present. Normally, loan amounts are provided as eighty percent of the insurance amount. The tenure of the loan and the repayment schemes are decided by the loan provider. Any unpaid amount is readjusted to the policy amount against which the loan has been applied for.
If you are searching for an easy and beneficial loan option in India, then loan against PPF is undoubtedly going to rank amongst the top. The loan amount depends on the PPF amount and is usually a small amount being provided to the applicant. Because of its small amount, the loan is disbursed quite quickly. Generally, the rate of interest is two percent higher than that of the PPF when the loan was taken. You can apply for the loan in the second year of your account opening. However, you need to note that you can apply for the loan within five years from the date of opening the account; you cannot apply for the loan after that period. The repayments are needed to be made within three years of the loan application.
The previous segment described the types of secured and unsecured loans available in India. However, you need to get acquainted with another term- term loans. Term loans are loans that are being provided based on a fixed term. The types of term loans in India are short term loans (up to 18 months), intermediate-term loans (two to five years), and long term loans (five to fifteen years). The assets that you need to provide as mortgage also depend on the type that you choose.
By this time, you certainly have got the idea about different types of loans available in India. Now, all you need is to choose the best bank for you, go through its loan details, and make an intelligent choice.