Full details about Loan
Whats is loan –
The loan refers to a type of credit Vehicle in which a sum of money is lent to another party in exchange for future repayment of the value or principal amount. A loan is essentially money borrowed with a promise of return within a specific time period/tenor. The lender decides a fixed rate of interest that you must pay on the money you borrow, along with the principal amount borrowed. Let us take a look at the different types of loans that are available in India.
many type of loan-
- secured Loan
- Unsecured Loan
1 . Secured Loan
Secured loans are protected by an asset. The item purchased, such as a home or a car, can be used as collateral. The lender will hold the deed or title until the loan is paid in full. Other items can be used to back a loan too. This includes stocks, bonds, or personal property.
Secured loans are the most common way to borrow large amounts of money. A lender is only going to loan a large sum with a promise that it will be repaid. Putting your home on the line is a way to make sure you will do all you can to repay the loan.
There are types of Secured
A. Loan on fixed deposits
Loan against FD (Fixed Deposit) is a type of secured loan where customers can pledge their fixed deposit as security and get a loan in return. The amount of loan depends on the FD deposit amount. This can go up to 90% – 95% of the deposit amount.
B. Loans against mutual Funds and Shares
Loans Against Securities is available in the form of an overdraft facility which is pledged against financial securities like shares, units and bonds. Loan Against Shares/Bonds/Mutual Funds is basically a loan wherein you pledge the securities you have invested in as collateral against the loan amount.
C. Gold Loans
Gold loan (also called loan against gold) is a secured loan taken by the borrower from a lender by pledging their gold articles (within a range of 18-24 carats) as collateral. Hence gold loan is the perfect solution to raise capital and use the fund when you require money to meet your financial needs.
D. Loans against Insurance Policies
Loan against Insurance policy is a product that is offered by many lending institutions, which enables you to enjoy the aforementioned benefits. However, do note that you can borrow against select life insurance policies only. For example, a permanent or whole life insurance policy qualifies for a loan application.
E. LAP ( loan Again Property )
Loan against property is one of the most forms of a secured loan where you can pledge any residential, commercial or industrial property for availing the funds required. The loan amount disbursed is equivalent to a certain percentage of the property’s value and across lenders.
While some lenders may offer an amount equivalent to 50-60% of the property’s value, other may offer an amount close to 80%. A loan against property helps you unlock the dormant value of your asset and can be used to satiate personal life goals such as higher education of children or marriage. Businesses use a loan against property for business expansion, R&D and product development among others.
F. Home Loan
Home loans are a secured mode of finance, that give you the funds to buy or build the home of your choice. The following are the of home loans available in India-
Land Purchase loan – purchase land for your new home
Home construction loan – Build a new Home
Home loan balance Transfer – transfer the balance of your exiting home loan at a lower interest rate
Top up Loan – can be used to renovate an existing home or have the latest interiors for your new home
2. Unsecured Loan
An unsecured loan is a loan that doesn’t require any type of collateral. Instead of relying on a borrower’s assets as security, lenders approve unsecured loans based on a borrower’s creditworthiness. Examples of unsecured loans include personal loans, student loans, and credit cards.
A. Short – Term Business Loans
Short-term loans usually have a tenure of a single year with capital being dispersed within days. Small to medium sized businesses don’t require long term funding, but rather a more convenient alternative means of funding to manage their equipment leasing and daily needs.
B. Personal Loan
Offering an instant of Liquidity, a personal loan is one of the most popular types of unsecured loans. However, since a personal loan is an unsecured mode of finance, the interest rates are higher compared to secured loans. A good credit score long with high and stable income ensures you can avail this loan at a competitive rate of interest. Personal loans can be used for the following purposes :-
- Manage all expenses of a family wedding
- Pay for a vacation or an international trip
- Finance your home renovation project
- Fund the cost of your child’s higher education
- Consolidate all your debts into a single loan
- Meet unexpected / unplanned / urgent expenses
Flexi Loan is a new age loan that efficiently caters to the immediate financial requirement of customers. This loan is a type of personal loan in which lenders provide pre-approved loan limit to their customers which is credited to their bank account and can be utilized by them as and when required.
An education loan is a sum of money borrowed to finance post-secondary education or higher education-related expenses. Education loans are intended to cover the cost of tuition, books and supplies, and living expenses while the borrower is in the process of pursuing a degree.
2. Vehicle Loans
An Auto Loan is taken by borrowers to purchase a new or used private or commercial vehicle. Auto loans are secured loans where the vehicle itself is used as a collateral. Lenders fix interest rates depending on the type of vehicle and loan amount. Interest rates are usually fixed for auto loans.