In India, people avail loans for various kinds of reasons. From purchasing a car to purchasing a home to even renovating it, there are several types of loans available in India. This helps individuals to access funds in order to meet their financial needs, and the lenders offer quite a wide range of loan options to meet different needs and requirements.
One of the most popular choices nowadays is a personal loan. This helps them cover their medical emergencies, weddings, vacations, or even home renovations.
What is a loan?
It is a financial arrangement in which a lender provides funds to a potential borrower, who agrees to repay the borrowed amount over a set period of time along with the interest amount. If it is about personal loans, one can easily apply for small personal loan online and get access to funds instantly.
However, these are usually provided by financial institutions/banks and can be used for various purposes such as personal expenses, home purchases, business, or education. In addition, loans can be secured or unsecured, depending on whether the borrower is required to provide collateral.
What are the different types of loans available in India?
Unsecured in nature, these types of loans are used to buy property. Compared to unsecured loans, they usually have a lower interest rate, as the property itself acts as collateral for the loan. The amount of loan which is to be issued can be up to 80% of the value of the property, with repayment tenure ranging from 10 to 30 years.
As the term suggests, this loan type is used to purchase a vehicle, with the car acting as collateral for the loan. Compared to housing loans, they generally have a higher interest rate with a repayment tenure ranging from 3 to 7 years. To be eligible for the same, the potential borrower must have a stable income source and a good credit score.
One of the most trending ways to gain access to easy funds to fulfil personal needs, this loan type is relatively easy to avail these days. However, they have a higher rate of interest than secured loans, as no collateral is involved. Moreover, the amount issued here usually ranges from several thousand to a few lakhs, with repayment tenure ranging from 1 to 5 years.
These loan types are generally used to fund higher education. If we compare them to personal loans, they generally have a lower interest rate than personal loans. The repayment tenure ranges from 5 to 15 years and can be up to Rs 50 lakhs, depending on the course and institution. To be eligible for this type of loan, the borrower must have secured admission and must offer income and collateral.
A business loan is used to expand an existing business or even to start a new one. These can be secured or unsecured, with the rate of interest varying depending on the lender and borrower’s creditworthiness. The amount of the loan here depends on the lender and borrower’s requirements.
In the current era, quick and easy personal loans online are easy to avail. It tends to fulfill many needs, such as home renovation, expanding an existing business, and various other personal reasons. Just download our personal loan app or apply on our website only to get access to funds within a blink of an eye!