A loan is an instant solution to your immediate monetary
requirements. Today, to cater to the diverse needs of different
borrowers, financial institutions have introduced different types of
loans.
When applying for any of these financial instruments, it is
important to make sure that you are aware of the different types
offered for different categories. This information will make your
selection process simpler and ensure that all your financial needs are
met. Read on to learn about these loan types.
Different Types of Loans in India
The most popular types of loans offered in India are listed below:
1. Secured Loans
Loans against any form of collateral or security are known as secured loans. Collaterals protect the lender's interests in case any borrower fails to repay their credit. You can find the different types of secured loans available in India below:
- Loan Against Property
A Loan Against Property generally comes with a longer repayment tenure of up to 180 months (15 years). Note that lenders check your credit score before approving your loan request. Thus, you should always maintain a good score.
- Loan Against Securities
You can capitalise on your investments by pledging them as collateral to borrow funds to meet your financial needs. Some investments that you can pledge include stocks, mutual funds, etc.
- Pre-Owned Car Loans
A Car Loan or Loan for a secondhand car can help you finance the purchase of your chosen car model without financial difficulty. For these loans, the car being purchased acts as collateral.
2.Unsecured Loans
Loans provided based on your credit score, income, and repayment history are known as unsecured loans. You don’t need any collateral to get an unsecured loan. Different unsecured loan types include:
- Personal Loan
A Personal Loan can be availed of for multiple reasons, such as covering urgent medical care expenses, home renovation, education costs, etc. Lenders ask for your income proof, address proof, etc., and check your credit score to know your creditworthiness before approving a personal loan application.
- Business Loan
A Business Loan can be availed of by commercial enterprises to fulfil their different business needs. As a business owner, you can use these loans to acquire machinery, raw materials, salary payments, or business expansion.
- Wedding Loan
Weddings in India can be quite extravagant, which also translates to expensive purchases and bookings. With Wedding Loan, you can plan your dream wedding without going over your budget.
- Vacation Loan
You can use a Vacation Loan to cover recurring or variable travel expenses like accommodation, food, shopping, leisure, etc.
Features and Benefits of Loans
There are various features and benefits of a loan, which include:
- Different Loan Products
In India, financial institutions offer various forms of loans to meet the diverse needs of people. You can fulfil your financial requirements with flexible loan terms and affordable interest rates.
- Competitive Interest Rates
Financial institutions like NBFCs offer competitive interest rates on loans, which makes it easy for you to borrow and repay. You can even compare the rates that different lenders offer and opt for the most suitable solution to meet your financial needs.
- Quick Application and Approval Process
The rise of digital lending has simplified the process of applying for loans. You can now easily apply for loans online in 5-10 minutes from the comfort of your home. Apart from this, minimal paperwork is needed. Lenders have integrated approval processes that are efficient and quick, allowing them to sanction the funds you need as quickly as possible.
ALSO READ :- How to Improve CIBIL Score to Get a Loan at Lower Interest Rates?
How to Apply for Loans?
You can follow the steps mentioned below to apply for loans without any hassle:
- Step 1: Visit the lender’s website and click on ‘Apply Now’.
- Step 2: Complete your online loan application form by filling in your name, monthly income, phone number, PAN number, etc.
- Step 3: Upload the documents and click on the ‘Submit’ button.
If you meet the lender’s eligibility criteria, your loan request will be approved quickly, and the funds will be disbursed within a short time. You can also check your credit score for free to determine your creditworthiness and find the best loan offers as per your credit score.
Check CIBIL Score for Free
Follow the steps below to check CIBIL score for free:
- Step 1: Click on the ‘Free CIBIL Score’ button.
- Step 2: Select employment type and specify your gender.
- Step 3: Enter your personal details.
- Step 4: Accept the terms and submit your form.
- Step 5: The report containing your CIBIL score will be delivered to your mail. Download the pdf and know your score.
To Conclude
The availability of different types of loans in India ensures that you can meet your urgent financial needs without any hassle. However, timely repayment of your debts is the key to maintaining good financial health and getting favourable terms on loans. You can also avail yourself of loans from accredited NBFCs like Poonawalla Fincorp at attractive interest rates with minimal documentation. Go ahead and select the loan that best meets your requirements.
Frequently Asked Questions About Loan Types
1. What are the benefits of a secured
loan?
Secured loans have better terms for repayment as
well as relatively lower interest rates.
2. What are
the benefits of an unsecured loan?
Unsecured
loans require no collateral, allowing you to apply for a loan
without putting any asset as security against the loan amount.
3. What is the minimum CIBIL score required to be
eligible for a loan?
A minimum CIBIL score of 700 is
required to be eligible for a loan. However, having a CIBIL score of
750 or above helps in getting loans at favourable terms.