If you are someone who’s not familiar with the different loan types in India, and then suddenly RBI comes in and drops some new rules about personal loans and credit cards, which might just confuse you a bit more, right? At this point, you might be thinking that your loan options are limited in India. But that is totally not the case you see, there are a bunch of different types of loans in the country that various financial institutions and banks provide to the general public of the country. And if you are just a newbie to this whole loan scene in the overall financial world, then you surely won’t know about these different options, right? Well, that’s what we are here for today because here we will be taking a little detour of the different types of loans available in India for 2024. Feeling intrigued already? Wait until we start then!
1. Type Of Secured Loans In India
1. Home Loan
Ever caught yourself daydreaming about owning a stunning home, a personal haven of sorts? Well, to transform this dream into reality, you’ve got the home loan to the rescue. Indian banks, you see, are more than willing to lend a hefty sum, often as much as 80% of your dream home’s valuation. Picture this: your ideal abode costs a whopping ₹1 crore, and the bank’s ready to pitch in with a solid ₹80 lakhs. Now, the interest rates kick off at about 7% per annum.
2. Gold Loan
Alright, moving onto something that glitters, gold! In our India, gold is way more than just a pretty ornament; it’s your financial backup in tricky times. Got some gold jewelry or coins lying around? You could pledge these shiny assets for a gold loan. Banks might just offer you up to 90% of your gold’s worth as a loan. The interest rates here start from 7.50% per annum. It’s like sending your gold on a short holiday to the bank and in exchange, you get the cash you need.
3. Vehicle Loan
Now, for those of you dreaming about cruising the streets in your own car or bike, here’s where a vehicle loan steps in. Be it a gleaming new car or a zippy bike, banks are offering loans for all types of vehicles. The loan amount and interest rates, of course, depend on your chosen ride. Let’s say you’ve got your eyes set on a car worth ₹10 lakhs. The bank might just cover up to 100% of its value. Interest rates hover around 7% to 7.5% per annum. So, you can hit the road in your new set of wheels while gradually paying the bank back, bit by bit.
4. Loan Against Property
Now, imagine you’re in a situation where you need a substantial sum of money, maybe for expanding your business or for some personal endeavors. Well, guess what? Your property, maybe your house or any other asset, could be your financial savior in such a case! You can avail a loan against it. Typically, banks might offer you about 65% to 70% of your property’s market value. And the interest rates? Well, they start from around 8% per annum.
5. Loan on Fixed Deposits
Here’s a fun fact, the money lying in your fixed deposits isn’t just sitting pretty, it can actually be a key to unlock more funds! Yes, banks can offer you a loan amounting to up to 75% of what you have in your fixed deposits. So, if you’ve got ₹1 lakh tucked away in your fixed deposit, you could potentially secure a loan of about ₹75,000. But yeah, the interest rates are generally a tad higher than what your fixed deposit is earning.
6. Loan Against Insurance
And here’s the final one, you see, certain types of insurance policies allow you to borrow against them. The amount you can borrow and the interest rates largely depend on the policy’s value and specific terms. So, in a way, that policy you’ve been investing in all these years can come to your rescue, just when you need it to.
2. Type Of Unsecured Loans In India
1. Personal Loans
Alright, let’s say you’ve got a big event coming up, maybe it’s your dream wedding or that vacation you’ve always wanted, or heck, even a sudden medical bill that just popped up. That’s exactly where personal loans jump in to save the day. Banks in India, you see, they’re ready to hand you a personal loan depending on how fat your paycheck is and how good you’ve been with your finances in the past. The amount you can get and the interest rate? Well, they vary, but you’re looking at rates typically hovering around 8% to 10% annually.
2. Short-term Business Loans
Now, let’s say you’ve got this killer business idea brewing in your mind, but you don’t have any money to spend on your idea to test it out and launch yourself in the business world. Well, here’s where short-term business loans come into play. The borrowing amount? It all hinges on how profitable your venture looks and your business standing. Brace yourself though, the interest rates are a bit higher, we’re talking 12% to 18% per year. Why? Because the bank’s taking a leap of faith here with no collateral.
3. Education Loans
Education, it’s our ticket to the future, isn’t it? But oh boy, it can burn a hole in your pocket. That’s why there are education loans, ready to lend a hand for you or your kids to chase those educational dreams. The loan usually covers your entire education cost, and the interest rates start at about 8.85% a year. The cool part? You only start paying back once you’re done with your studies, like a year later.
4. Credit Cards
Ever thought of credit cards as some kind of magic wallet? They let you spend on stuff even when your bank account’s giving you the ‘I’m empty’ look. Super flexible, sure, but watch out – they pack some hefty interest rates, think between 18% and 36% annually. It’s a big deal to use them wisely because, let’s face it, they can make or break your credit score. But if you play your cards right (pun totally intended), they’re a solid way to keep your finances on track.
3. Special Category Loans In India
1. Flexi Loans
Well, imagine having a big pot of money just waiting for you, and you can dip into it whenever you need to. That’s Flexi Loans for you! They give you access to a pre-approved fund pool, and here’s the thing, you only pay interest on the amount you actually use.
2. Loans Against Mutual Funds and Shares
Moving on, have you ever thought about those mutual funds or shares you own and how they can work a little extra for you? Well, that’s where Loans Against Mutual Funds and Shares come into play. This nifty option lets you borrow up to a whopping 60-70% of the value of your mutual funds or shares. And the best part? You get the cash you need without having to say goodbye to your investments.
That’s pretty much it. We’ve gone through the list, giving you the lowdown in a nutshell, hoping to clear the fog a bit. But yeah, if you’re still feeling a bit at sea, no worries! Sometimes, the best thing to do is to roll up your sleeves and do a bit of digging yourself.
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Anantha Nageswaran is the chief editor and writer at TheBusinessBlaze.com. He specialises in business, finance, insurance, loan investment topics. With a strong background in business-finance and a passion for demystifying complex concepts, Anantha brings a unique perspective to his writing.