Different Types Of Loans In India
Let’s look at some of the common types of loan available in India:
Personal loans are provided to meet the personal needs of the borrower. You can use the money from this type of loan in any way you see fit. You can pay off your previous debts, buy some expensive accessories for yourself, and plan a great trip with your family. It’s up to you how to use the money. The interest rates for this type of loan are on the higher side compared to the other types of loans.
Everybody dreams of owning their own house. However, buying a house needs a lot of money and it is not always possible to have that much money at once. Banks now offer home loans that can assist you in purchasing a property. A home loan can be of different types such as:
- Loan for constructing a house
- Loan for repairing and remodelling your existing home
- Loan for purchasing a land
Banks also offer education loans to the ones who need it. These loans offer a better support in terms of study opportunities to students are financially weak. Students looking to pursue higher education can avail education loan from any bank in India. Once they secure a job, they need to repay the money from their payment.
Among all the types of loans available in India, the fastest and easiest one to get is the gold loan. This type of loan was very popular back in the days when the rates of gold were rising exponentially. Gold companies are facing losses due to falling rates of gold in the recent times.
Vehicle loans help you fulfil your dream of owning a car or bike. Almost all banks provide this type of loan. It a secured loan means if the borrower doesn’t pay the instalments in time, the bank has the right to take back the vehicle.
There are multiple loan schemes by banks to assist farmers and their needs. Such loans have very low interest rates and help farmers to buy seeds, equipment for farming, tractors, insecticides etc. to generate a better yield. The repayment of the loan can be made after the yielding and selling of crops.
Overdraft is a process of requesting loans from banks. It means that the customers can withdraw more money than they have deposited in their accounts.
Loan Against Insurance Policies:
If you have an insurance policy, you can apply for a loan against it. Only those insurance policies that are aged over 3 years are eligible for such loans. The insurer can themselves offer a loan amount on your insurance policy. Approaching the bank for the same is optional. You need to submit all the documents related to the insurance policy to the bank.
Cash credit is a bank procedure of paying a customer in advance. This process permits the customer to borrow a certain amount from the bank. The customer provides a few securities to the bank in exchange for cash credit. The customer can renew this process each year.
Loan Against Bank FDs:
If you have a fixed deposit in with a bank, you can apply for a loan against the same. If the FD is around or more INR 100,000, you can apply for a loan of INR 80,000. The rate of interest levied on such loan is comparatively higher than that paid by the bank on your FD.
Loan Against Mutual Funds Or Shares:
Generally, people offer their mutual fund investment or shares as a collateral for their loan application. The banks give out loans of an amount lesser than the total valuation of the shares or mutual fund investment. The amount is lesser because the bank can then charge rate of interest if the borrower is unable to repay the amount.