Types of Loan in India

Types of Loans in India Loans are a financial tool that allows individuals and businesses to access funds for various purposes. In India, the lending industry has witnessed significant growth, offering a wide range of loan options to cater to diverse needs. This document aims to provide a comprehensive overview of the types of loans available in India, including their features, eligibility criteria, and application processes.

Table of Contents 1. Personal Loans 2. Home Loans 3. Car Loans 4. Education Loans 5. Business Loans 6. Gold Loans 7. Loan Against Property 8. Loan Against Securities 9. Agricultural Loans 10. Government Loans

1. Personal Loans Definition: Personal loans are unsecured loans that individuals can avail of for various personal expenses such as medical emergencies, travel, weddings, or debt consolidation.

Features: No collateral required.

Interest rates are usually higher compared to secured loans.

Repayment tenures typically range from 1 to 5 years.

Eligibility Criteria: Steady source of income.

Good credit score.

Age between 21 to 60 years.

Application Process: 1. Choose a lender.

2. Check eligibility and interest rates.

3. Submit necessary documents.

4. Loan approval and disbursal.

Apply For Loan

2. Home Loans Definition: Home loans are used to purchase or construct a house or apartment. They are secured loans where the property itself serves as collateral.

Features: Long repayment tenures, often up to 30 years.

Lower interest rates compared to personal loans.

Tax benefits under Section 24 and Section 80C. Eligibility Criteria: Sufficient income to repay the loan.

Good credit history.

Age between 18 to 70 years.

Application Process: 1. Choose a lender.

2. Submit property documents.

3. Verify your eligibility.

4. Loan approval and property valuation.

5. Disbursal and property registration.

Apply For Home Loan

3. Car Loans Definition: Car loans are used to finance the purchase of a new or used vehicle. These loans are secured by the vehicle itself.

Features: Competitive interest rates.

Loan tenure usually ranges from 1 to 7 years.

The car serves as collateral.

Eligibility Criteria: Sufficient income to repay the loan.

Good credit score.

Age between 21 to 65 years.

Application Process: 1. Choose a lender.

2. Select the car model.

3. Submit necessary documents.

4. Loan approval and vehicle verification.

5. Disbursal and vehicle registration.

4. Education Loans Definition: Education loans are designed to finance higher education expenses. They cover tuition fees, books, accommodation, and other related costs.

Features: Flexible repayment options.

Moratorium period during the course duration.

Tax benefits under Section 80E. Eligibility Criteria: Admission to a recognized course.

Co-borrower with a stable income source.

Typically, no age limit.

Application Process: 1. Choose a lender.

2. Provide course and college details.

3. Submit required documents.

4. Loan approval and disbursement to the institution.

5. Business Loans Definition: Business loans are provided to entrepreneurs and businesses for various purposes, including working capital, expansion, or equipment purchase.

Features: Secured and unsecured options.

Flexible repayment terms.

Interest rates based on creditworthiness and business plan.

Eligibility Criteria: Business vintage and profitability.

Good credit history.

Collateral may be required for certain loans.

Application Process: 1. Choose a lender.

2. Submit business plan and financials.

3. Loan approval and collateral verification (if applicable).

4. Disbursal and business utilization.

Apply For Business Loan

6. Gold Loans Definition: Gold loans are secured loans where gold ornaments or assets are pledged as collateral for immediate funds.

Features: Quick disbursal.

Lower interest rates compared to personal loans.

Loan tenure typically ranges from 1 to 3 years.

Eligibility Criteria: Ownership of gold assets.

Age requirement varies by lender.

Application Process: 1. Visit a lender's branch.

2. Appraise your gold assets.

3. Submit KYC documents.

4. Loan approval and gold storage.

5. Repay the loan and retrieve the gold.

7. Loan Against Property Definition: Loan against property (LAP) allows individuals to use their property as collateral to secure a loan for various purposes like business expansion or personal needs.

Features: High loan amounts.

Extended repayment tenure.

Competitive interest rates.

Eligibility Criteria: Ownership of a valuable property.

Stable source of income.

Good credit history.

Application Process: 1. Choose a lender.

2. Property valuation and legal verification.

3. Submit required documents.

4. Loan approval and disbursement.

Apply For Loan Against Property

8. Loan Against Securities Definition: Loan against securities allows individuals to pledge their financial securities like stocks, mutual funds, or bonds to secure a loan.

Features: Lower interest rates compared to personal loans.

Quick processing.

Continuous ownership of securities.

Eligibility Criteria: Ownership of eligible securities.

Margin requirement varies.

Application Process: 1. Open a loan against securities account.

2. Pledge eligible securities.

3. Submit required documents.

4. Loan approval and disbursement.

9. Agricultural Loans Definition: Agricultural loans are designed to support farmers and agriculture-related activities. These loans help in purchasing equipment, and seeds, and meeting other farming needs.

Features: Subsidized interest rates.

Collateral-free loans for small farmers.

Government schemes like Kisan Credit Card (KCC).

Eligibility Criteria: Farmer with a landholding certificate.

Repayment capacity assessment.

Application Process: 1. Apply through a bank or government scheme.

2. Submit required agricultural documents.

3. Loan approval and disbursement.

10. Government Loans Definition: The Indian government offers various loan schemes to promote specific sectors like micro, small, and medium enterprises (MSMEs), startups, and more.

Features: Subsidized interest rates.

Easy terms and conditions.

Encourages entrepreneurship and economic development.

Eligibility Criteria: Varies based on the specific scheme.

Application Process: 1. Identify the relevant government scheme.

2. Check eligibility and documentation requirements.

3. Apply through the designated channel.

4. Loan approval and disbursement.

Bank Business Loan ICICI Bank Business loan SBI Business Loan HDFC Bank Business Loan IndusInd Bank Business loan Standard Chartered Business Loan Fullerton Business Loan Tata Capital Business Loan Bank of Baroda Business Loan