Categories of Loans: Exploring the 9 Different Types of Loans in India – Banking Loans in India. I was recently inquired about the diverse array of loans accessible in India. Here is a compilation of various loans provided by banks in India. Loans stand as a widely employed financial resource across industries, and in India, they come in several types.
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Types of Loans in India: Exploring 9 Varieties
- Home Loan
- Personal Loan
- Business Loan
- Educational Loan
- Vehicle Loan
- Gold Loan
- Loan against PPF
- Loan Against insurance policies.
- Agriculture loan
Owning a house is a universal dream. Home loans facilitate the realization of this dream, providing financial assistance for purchasing land, constructing a home, buying a home, or renovating/extending an existing home.
2. Personal Loan:
Granted based on various borrower credentials, personal loans have a higher interest rate and can be used for any purpose. They can be secured against collateral or, in some cases, granted without security.
3. Educational Loan:
Aimed at supporting those lacking financial resources for education, educational loans come with lower interest rates compared to other loans in the market.
4. Business Loan:
Provided to existing businesses or startups, these loans vary in complexity based on the banks’ criteria. Established businesses use these loans for expansion, while startups use them to initiate their business ideas.
5. Vehicle Loans:
Fulfill your dream of owning a vehicle with a secured loan. Lenders have the right to possess the vehicle in case of repayment default.
6. Gold Loans:
Considered one of the safest loans, it is granted against gold. The interest rate varies with gold rates, and the lender can sell the gold in case of default.
7. Loans Against PPF:
An easy and beneficial loan, with a simple sanctioning process and a slightly higher interest rate than the earnings on the Public Provident Fund (PPF).
8. Loan Against Insurance Policies:
Easily obtained against an insurance policy, up to 80% of the surrender value can be taken as a loan. The repayment process is straightforward.
9. Agriculture/Crop Loans:
Supporting farmers in the country, these loans help finance various agricultural operations at a slightly lower interest rate compared to other loans.
Types of loans FAQ
A home loan is financial assistance provided to individuals for purposes such as purchasing land, constructing or buying a home, and renovating/extending existing homes.
A personal loan is granted based on various borrower credentials and can be used for any purpose. It may or may not require collateral.
An educational loan is designed to support individuals lacking financial resources for education, offering lower interest rates compared to other loans.
Business loans are granted to existing businesses for expansion or startups to initiate business ideas. The complexity of obtaining these loans varies.
A vehicle loan enables individuals to own a car or bike. It is a secured loan, and the lender can possess the vehicle in case of default.