Types of Loans You Need to Understand

Types of Loans You Need to Understand

In : Business By storytimes About :-3 months ago

Loans can be in many forms, even borrowing some money from our friends is also a kind of a loan. Loans can be utilized for various things in today’s world as they play a very important role in one's well maintained financial lifestyle. Loan agreements can come in all structures, differing from basic promissory notes among friends and family members to increasingly complex advances like home loans, car loans, payday, and student loans. So today we are here to explain to you about some different types of loans you can opt for.

Education Loans

Loans

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Collateral: Differs From Lender to Lender

Interest: 10 to 15%

Points to Note: 

  • Longer repay intervals
  • Many Tax Benefits
  • Higher Interest rates

Gold Loans

Loans

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Collateral: Physical Gold

Interest:  11 to 14%

Points to Note: 

  • Faster loan sanctions.
  • Not many documents required for the loan.
  • Your gold holding may be sold off by the lender if the loan is not repaid in the decided time interval.

Business Loans

Loans

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Collateral: According to Your Loan Recruitment

Interest: 11 to 16%

Points to Note: 

  • No collateral required if your business is doing well.
  • You can repay in longer time intervals.
  • Slightly high interest rates.

Car or Vehicle Loans

Loans

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Collateral: On Banks Trust, Income Proof, Credit Score

Interest: 10 to 12%

Points to Note: 

  • Lower Interest Rates
  • Longer repayment intervals
  • Tax Benefits

Personal Loans

Loans

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Collateral: On Banks Trust, Income Proof, Credit Score

Interest: 13 to 27%

Points to Note: 

  • Loans are disbursed quickly but need a formal application.
  • Given only to the salaried, self-employed or professionals.
  • Personal Loans are costly.

Home Loans

Loans

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Collateral: Physical property

Interest: 8 to 12%

Points to Note: 

  • You can avail bigger loan if your income level is high.
  • Installments can be Flexible
  • Many Tax Benefits

Loans Against Car

Loans

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Collateral: Your Vehicle

Interest: 12 to 16%

Points to Note: 

  • If your car has a good resale value, you can get a bigger loan.
  • Banks don't approve vehicles that are more than 5 years old.

Loans From the Unorganized Sector

Loans

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Collateral: Differs From Lender to Lender

Interest: 22 to 27%

Points to Note: 

  • Very Difficult to Pay
  • Interest and terms are beyond limits

Loans Against Property

Loans

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Collateral: Physical Property

Interest: 10 to 15%

Points to Note: 

  • Documentation are same just like a home loan
  • Less Processing Time

Top up Home Loans

Loans

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Collateral: Existing Home Loan

Interest: 10 to 12%

Points to Note: 

  • Lower Interest Rates
  • Not Many Documents Required
  • You can repay it in longer time if you have a good credit score

Scroll Down For More: Understanding Credit Risks And Benefits