Broadly, there are two types of loan in India – unsecured and secured. In case of unsecured loans, borrowers can avail a substantial loan value without any security. On the other hand, for secured loans, borrowers are required to mortgage an asset to apply.
1. Unsecured loans
The most prominent types of unsecured loans are –
1. Personal loan
One of the top reasons to apply for a personal loan is that there is no restriction on the use of the availed loan amount. It means borrowers can be utilised by borrowers for several purposes like –
– Meet a medical emergency.
– Fund higher education.
– Consolidate debt.
– Plan a wedding.
– Go on an exotic vacation.
– Renovate their home.
The best personal loan offers a substantial loan value and can be availed at a reasonable rate of interest by eligible applicants. There are also several ways to get the best personal loan rate.
Usually, leading financial institutions like Bajaj Finserv sets simple eligibility criteria for applicants. For instance, any residing Indian between the age of 23 years and 55 years with a steady income, stable job and a good CIBIL score can apply for a personal loan.
The NBFC also extends pre-approved offers which simplify the loan process and help save time. Besides personal loans, such offers also apply to financial products like business loans, credit cards, among others. Check your pre-approved offers in a few steps by just entering your name and contact information.
Individuals should find out how to avail a personal loan with a bad CIBIL score so they can make the most of this unsecured credit as well. They should also check the important documents required while applying for a personal loan to streamline the process better.
2. Business loan
This unsecured loan tends to provide financial assistance to small and medium business owners. It helps them to keep their business operations smooth and running. Borrowers can use the loan value to –
- Increase cash flow.
- Purchasing equipment and raw material.
- Installing new technologies.
- Replenishing stock.
- Purchasing raw material.
- Expansion or increase in the scale of operation.
- Hiring the required talent.
- Leasing a larger premise.
Notably, a business loan can be availed by eligible self-employed non-professionals, self-employed professionals and entities.
2. Secured loans
The most prominent types of secured loans are –
- Home loan
Borrowers avail this secured loan to either purchase or construct a house. Most financial institutions extend a high value as home loan amount, which is generally disbursed within 4 working days post verification.
Almost all financial institutions offer a flexible tenor of up to 20 years to borrowers to help them repay the loan value conveniently.
Home loan borrowers are often entitled to avail facilities like balance transfer and top-up loans. They may also enjoy the benefit of convenient part-prepayment and foreclosure facilities.
2. Loan against Property
In this type of secured loan option, individuals are required to mortgage their property to avail a loan amount. Typically, this loan option extends a high value to eligible applicants.
The sanctioned amount is usually 60-70% of the mortgaged property’s prevailing market value. Like a personal loan, a loan against property does not come with any end-use restriction and helps to meet several requirements effectively.
Other than these, there are several other secured and unsecured types of loan in India. Notably, each loan comes with a different set of features, benefits and limitations. Individuals must consider all such aspects to choose the best loan option for them.