Bank Loan and its Types Available in India

I don’t think loan needs any introduction for you to understand what it is, especially after the very popular cases of Nationalized Banks in India where borrowers has failed to pay their debt.  If we still talk about the definition of loan then, it is a sum of money borrowed from a bank to assist for certain planned and unplanned events. Borrowing money in exchange for future repayment of the principle amount along with the interest is known as Loan.

Loans can be great for the people who are in need of money but also it can be trouble if you will not be able to return back in the required time frame. Anyone can apply for a loan from any of the government, nationalized or even private banks. A borrower needs to submit certain set of documents include: Identity proof, address proof, income proof, etc. by which a lender can understand the financial stability of the person who has applied for the loan and analyze the credit risk. 

Loan can be both secured and unsecured. A secured loan involves pledging of assets such as car or property. If the borrower fails to pay the loan with the interest then, they can take the possession of the assets. Unsecured loans is preferred but not as common, if the borrower doesn’t pay back the loan then the lender does not have the right to take anything in return. Let’s see the different types of loans available in India: 

Personal loans are meant to meet the personal needs of an individual. You can borrow this loan from almost any private or nationalized banks and use it for your personal use like for buying any electronic gadget, go on a vacation with family, etc. This is not a secured loan so you don’t need to pledge your assets for repayment of the loan. But this loan is for small amounts and the interest rates are higher than the secured loans. 

Home Loan 

People borrow loan from banks to buy a property, land or home as this requires huge amount. Home loans can be of many types: 

Loan for land purchase.

Loan for repairing and extension of your home.

Loan for building a home. 

Education Loan

Banks also offer education loans to their customers. If there is someone who is financially backward can avail the better education or study opportunities through this loans. 

Vehicle Loan

Vehicle loans or car loans are the loans that any banks provide you for buying your car or bike. This comes under secured loans so if the installments are not paid on time then, the lender have the right to take back the vehicle.

Gold Loan

This is the easiest loans people can borrow from any bank for purchasing gold jewelries and coins. 

Agricultural Home

The farmers of India can also borrow loan from banks. For buying seeds, insecticides, tractors and other essentials for agriculture farmers need funds. Banks offer different types of loans for the farmers which can help them in their agriculture practices. The farmers have to repay the loan once their crops are sold.

Over Draft

This is a procedure for loans from banks. This means a customer withdraws more money than he has deposited from any particular bank.

Apart from this, Cash Credit, Loan against Insurance Policies, Loan against Shares or Mutual Funds and Loan Against Bank FDs are also the types of Loans in available in India. 

Article Source: http://aobwealthmart.blogspot.in/2018/04/bank-loan-and-its-types-available-in.html

Report this Page