A Loan essentially refers to money that you borrowfrom a lender with the promise of returning it within a fixed period. The
lender fixes an interest rate that decides the interest that you need to pay
along with the principal amount you borrowed.
Types
There are different Loans that you can avail of inIndia like a Personal Loan, Auto Loan, Home Loan, etc. However, they areprimarily classified into the following two types based on the purpose of their
use:
Unsecured Loans
These do not require any collateral. Instead, theseare approved based on your creditworthiness. Examples include:
Personal Loans
This is the most popular Unsecured Loan and, today,you can get such a Loan instantly without any hassles, using the Banking app provided by your bank. Just upload the necessarydocuments and submit your Loan application online. Once approved, the amount gets
transferred directly to your Savings Account. Personal Loans can be Renovation
Personal Loans, Gadget Loans, Travel Loans, or Wedding Loans.
Besides this, Unsecured Loans also include Short-TermBusiness Loans that can be availed of to expand your business or meet your
organisation’s daily expenditures.
Secured Loans
These Loans require collateral i.e., you need topledge an asset that belongs to you to the lender as security. So, if you
cannot repay the Loan, the lender can use the asset to get the money you
borrowed. Examples of Secured Loans include:
Home Loans
As you apply for Personal Loan, you can apply for Home Loans to purchase a house. ThisLoan requires you to pay a down payment of at least 20% of the property’s
value. Moreover, the corpus can be used for other purposes too. These include
the following:
· To upgrade anexisting house
· To expand a housethat already exists
· To transfer anexisting high Home Loan interest rate
Gold Loans
This Secured Loan needs you to pledge gold coins orjewellery as collateral and avail of a certain percentage of the value of the
pledged gold as a Loan. Some banks offer two Gold Loans:
· Agri: These are offered to agriculturists who engage infarming and allied activities.
· Non-Agri: These are offered to other individuals to enable themto meet their business and personal expenses.
Loan Against Property
This is the most availed Secured Loan and allows youto pledge a commercial, residential, or industrial property to borrow funds.
The Loan corpus disbursed is equivalent to a percentage of the property value
that you pledge. Besides these, Secured Loans also include Loans Against Shares
and Mutual Funds, Loans Against Fixed Deposits, Loans Against Insurance Policies, etc.
You can also avail of Instant Personal Loanlike Auto Loans, Education Loans, etc., which could be secured or unsecured.
