A loan is essentially an amount borrowed for a fixed period. The amount borrowed requires it to be repaid along with a predetermined amount of interest that is calculated on the principal amount. There are different types of loans in India which can be subdivided into secured and unsecured loans.
Financial institutions offer loans without collateral based on different factors like the borrower’s credit score, repayment history etc. Lenders can avail of these loans to finance different experiences as well as deal with emergencies without creating a dent in their pockets. However, these loans attract a higher rate of interest as compared to other loans. The different types of unsecured loans you can avail of to finance your requirements are as follows:
You can opt for a personal loan to finance any of your requirements that include education, marriage etc. The number of persons applying for personal loans to finance different needs has increased sharply in the past decade. Between 2015 and 2018, unsecured loans have witnessed a growth of approximately 27 per cent or 4 times the bank credit. The increase in borrowing growth is attributed to several reasons like lower interest rates, liquidity and quicker disbursements etc. Receive an estimate of the amount you are eligible for with the help of a personal loan eligibility calculator.
The required documents for personal loans include:
It doesn't matter whether you are a budding entrepreneur or a business person looking to expand your business. Business loans have your back with customized solutions for all your requirements. You can avail of a business loan right from financing your capital requirements, expanding premises as well as hiring staff. The advantages of opting for small business loans include:
Must Read: Types of Unsecured Loans in India
Secured loans require you to provide an asset as a security against your borrowing. The assets secure the rights of the lender in case the borrower cannot make good the borrowings. The loans have a lower rate of interest as compared to unsecured loans. The Pradhan Mantri Awas Yojana initiative by the Prime Minister of India has provided a major impetus to home loans in India. A couple of secured loans include:
A home loan provides you with the finance required to purchase or construct the home of your dreams. You have the option of applying for a loan to purchase a new or resale home, home improvement and extension. The lender requires you to pay approximately 20% of the cost of the home upfront.
Property loans allow you to mortgage your property to avail of funds to finance your business or personal requirements.
Loan against securities allows you to capitalize your investments by pledging them to borrow funds for personal or business requirements. You have the option of pledging investments like shares, mutual funds etc. Advantages of opting for a loan against securities include:
Financial institutions have not sanctioned secured and unsecured loans for many other purposes in addition to those mentioned above provided the money is borrowed for a legitimate purpose. Honour your payments on time since this goes a long way in ensuring sound financial health. Make sure to weigh the pros and cons of secured and unsecured loans before making an application for the same.