DIFFERENT TYPES OF LOANS IN INDIA
In India, there are various types of loans available to cater to the different financial needs of individuals and businesses. Some of the common types of loans in India include:
Personal Loans
These are unsecured loans that individuals can avail to meet personal expenses like medical emergencies, travel, home renovation, wedding expenses, etc. The loan amount and interest rates are based on the borrower’s creditworthiness.
Home Loans
Home loans are secured loans used to purchase or construct a house or property. They typically have longer repayment tenures and lower interest rates compared to personal loans.
Car Loans
Car loans are used to finance the purchase of a vehicle. They may be secured (where the car acts as collateral) or unsecured, depending on the lender and borrower’s credit profile.
Education Loans
Education loans are designed to support students’ higher education expenses, including tuition fees, accommodation, books, and other related costs. These loans often come with lower interest rates and flexible repayment options.
Business Loans
Business loans are taken by entrepreneurs and businesses to finance their working capital, expansion, purchase of equipment, or other business-related needs. The loan terms may vary based on the type of business and its financial health.
Gold Loans
Gold loans are secured loans where borrowers pledge their gold ornaments or assets as collateral to avail of funds. These loans are often preferred due to their quick processing and lower interest rates.
Loan Against Property (LAP)
LAP is a secured loan wherein borrowers mortgage their residential or commercial property to get funds for various purposes, including business expansion, debt consolidation, or other personal needs.
Agricultural Loans
These loans are designed to meet the credit requirements of farmers and agriculturists for agricultural purposes, including purchasing equipment, seeds, fertilizers, etc.
Loan Against Fixed Deposit (FD)
In this type of loan, borrowers can avail of funds by pledging their fixed deposits as collateral with the bank.
Personal Overdraft (OD)
Personal overdraft is a credit facility linked to an individual’s savings or current account, allowing them to withdraw more than their available balance up to a pre-approved limit.
Consumer Durable Loans
These loans help individuals finance the purchase of consumer durables like electronics, appliances, etc.
Microfinance Loans
Microfinance institutions offer small loans to low-income individuals, often unbanked, to support their income-generating activities or meet essential needs.
It is important to note that the terms, interest rates, and eligibility criteria for these loans may vary from one financial institution to another. Before applying for any loan, it is advisable to thoroughly understand the terms and conditions and assess your repayment capabilities.
This article has been written by Jyoti Singh, working as an intern in Vidhan News.
