Types of Loans in India
Loans are considerable amounts of money that you borrow from a person or an organization such as a bank. In case you need the money for a short period and have the capacity to return it back quickly, you can opt for a personal money lender. However, when you require a large amount of money and wish to pay it back over a larger period, you should opt for a bank loan.Banks usually classify the types of loans that they offer in different ways. Most of the bank loans are classified based on the amount of the loan as well as the period of the loan. When you set out in the market to apply for a loan, you need to make sure that you understand your needs well enough. It is a good idea to have a basic framework of working of bank loan and a fair estimate of the time required for you to pay back the loan.The four major types of loans that banks offer are listed here.
If you need a loan to purchase a new item such as a house, car or television, you can get a personal loan. A personal loan is the most diverse regarding the amount as well as payback period. While you can pay a small loan worth a few thousand rupees for a laptop or a smartphone over the course of a few months, a large amount worth lakhs is paid over a few years. The personal loan is further classified into home loans, vehicle loans, student loans, etc. Banks usually give personal loans fast. Bank officials decide on the amount that you can get a personal loan depending on your income status or the value of your assets. The interest rates on personal loans can be really high ranging from 10 – 15%.
Also Check – Detail of Business Loan
A bank gives a home-equity loan on the value of the house that the person possesses. A home-equity loan is usually worth lakhs of rupees and is taken by a person to buy a new house or a highly valuable asset. The home-equity loans usually have a gestation period of over 15 years. In some cases, the home-equity loans are also tax deductible making them a good deal for a person who has meager earnings and wants to invest in a new property.
Credit Card Loan
Spending money using a credit card is also considered to be a loan of sorts as you are spending the bank’s money in confidence that you will pay the amount by the end of the month. A credit card usually has a well-defined spending limit, but this limit changes from card to card depending upon the type of card.
Small Business Loan
A small business loan is granted to a person when he/she submits a proposal of business to the bank. Like the other loans, the person does have to put up collateral against the loan amount. However, in case the bank is interested in the idea, it can grant a larger sum of money than the total combined value of the assets.
For more Detail Also Check – Apply For Loans