Types of loans – 9 Types of Loans in India. Recently I have been asked about the types of loans available in India. List of Various Bank Loans available in India, Loan is one of the widely used source of finance across the industries and there are following types of loans in India.
Types of loans – 9 Types of Loans in India
- Home Loan
- Personal Loan
- Business Loan
- Educational Loan
- Vehicle Loan
- Gold Loan
- Loan against PPF
- Loan Against insurance policies.
- Agriculture loan
1. Home Loan :
It’s every one’s dream to have a own house. Living in own home gives us different feeling compared to the residences in rental building. Many people in India belonging middle class and below middle class for which having an own house may be big dream. Home loan enables them to make this dream true.
Home loan gives financial assistance for
- Purchase of Land
- Construction of home
- Purchase of home
- Renovation / extension of existed home
2. Personal Loan :
Personal loan is grated by assessing various credentials of the borrower. Bank examines the source of income and previous loan repayment history etc.,This loan amount can be utilized for any purpose you want. Rate of interest charged in these loans is much more higher compared to the other modes of loans. Loan processing fee charged by the banks is also very high.
Personal loan is sanctioned against collateral security and some banks sanction without any security.
3. Educational Loan :
The main purpose of this loan is enabling those who want to study further having no financial assistance to pay their fees. No one should be away from school due to lack of money. There are many loan schemes provided by different banks. Generally rate of interest on these loans is low when compared to the other loans in the market.
4. Business Loan :
Business loans are granted to the existing business entities and startup businesses. Based on the criteria of the banks the complexity of getting these loans varies. Generally these loans are granted to the existing business people to expand their business where as the startups are granted these loans to initiate their business idea. Getting loan for startups is much difficult than getting for expanding an existed business.
Must Read – Loans and deposits u/s 269SS and 269T
5. Vehicle Loans:
Vehicle loan enables you fulfills your dream of having a own car or a bike. Vehicle loan does not involve complex procedural requirements since it is a secured loan. Lender of the loan has right to have the possession of the vehicle if there is any default in repayment of the loan. Loan can be paid in EMI s of various plans.
Must Read – Deduction in Respect of Various Loans
6. Gold Loans:
This can be said as one of safest loans ever granted by banks and financial institutions. This is the loan granted against gold. The rate of interest will vary depends on the trend of gold rates. Lender has right to receive his proceedings by selling the gold in auction at the time of default made by the borrower. Loan can be repaid in EMIs. Rate of interest will be slightly higher than the other loans in the market.
7. Loans against PPF:
This can be said as one of the beneficial loans ever sanctioned. Because the process of sanctioning the loan is very easy and the rate of interest is just 2% higher than actually what it earns. Recently I have written an article on this you can read it by opening this link… How to get loan against PPF – A discussion
8. Loan against Insurance Policies:
If you have an insurance policy then it is easier to get a loan against that policy. Depends upon the type of the policy up to 80% of the surrender value of the policy can be taken as loan. Insurance company itself gives you the loan against policy issued by it. Otherwise one can get it sanctioned from the banks also. The repayment of loans is also very easy like any other loans.
9. Agriculture / Crop loans:
India is a country where more than 60% of the population depend on agriculture for their livelihood. Unfortunately due to the erratic crop results farmers are lacking financial support to continue their farming further. Agriculture loan enables them to get finance for various agriculture operations. Rate of interest on these loans is slightly low compare to the other loans in the market.