How Many Types Of Unsecured Loans Are Available In India?
An unsecured loan does not require any collateral, whereas a secured loan is where you have some collateral as security. Collateral for security can be your property, gold, etc. In case you default in payment, the lender can recover the secured loan amount by selling the collateral asset. Unsecured loans are generally of smaller amounts compared to secured loans. You do not have to keep an asset with the lender and can repay the borrowed amount stress-free without worrying about your asset being taken away by the lender. There are many types of unsecured loans in India, such as:
- Term loans – plain-vanilla loans with a fixed interest rate and tenure.
- Debt consolidation loan – a loan taken to combine existing loans into one single debt (preferably at a lower interest rate) so that repayment becomes easier to track.
- Wedding loan – a loan taken to cater to expenses incurred during a wedding.
- Vacation Loan – a loan taken to cater to travel and holiday-related expenses.
- Home renovation Loan – a loan taken to renovate the existing home.
- Top up – an additional loan taken to top up the existing loan.
- Bridge loan – a loan with a tenure of less than a year. It is generally taken for any short-term financial requirements.
- Business loan – a loan taken to finance the business.
- Professional loan – a loan taken by professionals such as doctors, CAs, and CSs to improve their professional practice.
There could be many more types of unsecured loans in India, that cater to different purposes.
