5 Most Common Types of Loans in India
1. Loan Against Property
These are close-ended secured loans wherein the borrower needs to follow a set payment schedule over a stipulated period. While you need to mortgage a residential, commercial or industrial property in order to Avail a Loan Against Property, what makes it popular is the comparatively low rate of interest. Usually, one can expect to receive anywhere between 40 to 70% of the market value of the mortgaged property. This concept is known as Loan to Value or LTV.
This type of loan is taken for the purpose of expansion of business, purchase of new machinery, purchase of property, home renovation, and personal expenses such as education, marriage, and others.
2. Home Loan
Buying a residential property is one of the biggest investments in life. This requires access to large amount of funds. Moreover, these loans are accompanied by attractive interest rates and flexible repayment periods which make them a better decision as compared to the investment of one’s entire savings on building/purchasing the house. We at MyMoneyMantra have made it exceedingly easy to Apply for a Home Loan online.
A Home Loan is usually taken in order to –
- Buy a residential property currently under construction
- Purchase a ready-made residential property
- Buy a plot in a private development
- Constructa new property to be used for residential purposes
- Purchase a plot with the aim of construction of a house
3. Business Loans
For a business to grow and sustain, it is imperative that it enjoys a consistent inflow of funds. While these funds help meet the day-to-day requirements of the business, there are times when investments pertaining to expansion of business or purchase of new assets needs to be made. Funds for such investments canusually be borrowed from a lending institution, in the form of a Business Loan.
This is an unsecured loan which can be taken by a self-employed professional or a business owner. This loan type varies from a minimum of 3 Lakhs to a maximum of 1 Crore, while the tenure of repayment may range from 1-5 years, depending on the terms and conditions of the loan.
There are essentially three types of Business Loans:
- Term Loans – Meant for business expansion, capital infusion or acquisition of long-term fixed assets including land, building or machinery.
- Special Business Loan for Women Entrepreneurs – Low-interest loans meant for female entrepreneurs with more than 50% ownership in the business.
- Working Capital Loans – Meant to meet the operating expenses of a business.
4. Personal Loans
As the name suggests, thisloan is used for personal purposes such as repayment of debts, celebrating a festival, wedding expenses, taking a vacation, buying electronics, home renovation, unexpected medical expenses, and so forth.
Typically unsecured in nature, Personal Loans are offered on the credibility of the borrowers, along with their capacity to repay the amount. The amount that can be procured through this loan varies from a minimum of 50,000 to a maximum of 50 Lakhs, while the tenure of repayment may range from 24 months to 60 months. Since this loan does not require any collateral as security, the rate of interest is usually high.
5. Credit Cards
Contrary to popular opinion, even Credit Cards constitute a loan. Unsecured and open-ended in nature, a Credit Card allows the borrower to take anywhere between a small amount of money, up to the credit limit, and repay the same in a stipulated period.
While this loan has a comparatively higher rate of interest than other loans, the sheer flexibility that it offers ensures great value for money. Right from paying for a meal at a restaurant to enjoying a vacation, from buying a refrigerator to paying the children’s school fee, Credit Cards can be used for a wide variety of purposes!
With MyMoneyMantra by your side, finding the most suitable loan at the most competitive interest rates is easy.
Also Read : Go Debt-Free!
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