You must have seen people taking loans for different needs. Like some people take loans of lakhs of rupees to build a house or to study abroad. Some people take loans of a few thousand rupees to buy a bike or to get the house repaired. With the help of a loan, you can bear those expenses for which you do not have money. Because of the loan, you do not have to wait for years to save to meet your needs. One of its big advantages is that you can take a loan in case of emergency or emergency, such as medical expenses, car breakdown, etc.
In this blog, we will understand in detail what a loan is, what are the types of loans, and other important things related to this topic. By the way, if you need a personal loan of up to ₹ 5 lakh, then you can complete its process within 6 minutes by clicking here. You can take a loan online without any paperwork and repay the money in easy installments. On taking a loan from Zip, the money comes to the bank account immediately.
What is a term loan?
Term loan means taking a loan for a fixed period of time and repaying the loan amount along with interest within that period. When you take a loan, the bank or NBFC gives you different tenure options to repay the loan. These options can range from a few months to a few years. These tenure options depend on the type of loan, the loan company’s credit policy, loan amount, etc. You can choose the repayment period as per your convenience.
Types of Term Loans
Each type of loan suits different circumstances and needs. The interest rate is determined based on the loan amount, tenure and other factors, and different repayment period options are offered.
The type of loan you avail depends on your needs, financial situation, purpose of the loan and your repayment capacity. If you are wondering how many types of term loans are there, the answer is three – short-term loans, intermediate-term loans and long-term loans.
Short-term loans
The loans that come under this usually have a tenure of a few months. They can be taken for any purpose, such as household expenses, shortage of money, etc.
Medium term loans
The loans that come under this category have a tenure of between one to five years. This includes large amount personal loans, car loans, education loans, etc.
Long term loans
Loans whose repayment period is more than 5 years come under this category. Like home loans, business loans, etc.
Types of loans in India
People choose loans based on their needs like buying a home, pursuing higher education, starting a business, etc. The purpose of the loan is determined by its credit policy which includes the loan limit, interest rate, repayment period, etc.
It is important to understand all these aspects before taking a loan. You should compare loan offers from different banks and NBFCs, see how much EMI you can comfortably pay every month, and ensure which loan will suit your needs. Start the loan process only after taking all these things in mind.
Now we will see what are the major types of loans:
Secured Loan
A secured loan is a type of loan in which you need to pledge something like house, land, jewellery, etc. If you do not repay the loan, the loan company has the right to seize the asset. Since the bank or NBFC has to take less risk in this type of loan, its interest rate is lower than other loans. Let us look at some examples of secured loans:
Gold Loan
In gold loan, you can take a loan by pledging gold jewellery, gold coins, etc. Since it is a type of secured loan, its interest rate is usually lower than unsecured loans. You can also take a gold loan by pledging digital gold. To know more about digital gold.
Loan against securities (LAS)
This is called a secured loan. In this, you can take a loan by pledging securities like shares, mutual funds, bonds, etc. If you do not repay the loan, then the loan companies can recover by selling them. Since it is a secured loan, it can be easily available even with a low credit score.
Loan against property (LAP)
It is called loan against property in English. In this, you can take a loan by mortgaging your house, plot, apartment, shop, factory, etc. Usually, you can get up to 70-80% of the value of your property from banks and NBFCs. In this, there is a risk of property being confiscated if you are unable to repay the loan.
Home loan
With a home loan, you can buy residential property like flat, plot, etc. You can also construct or renovate a house with the money from the home loan. With its help, you can get your dream home even if you do not have enough money.
Business Loan
Business loan is given to help businesses financially. Businessmen can use this loan amount to start a new business, expand an existing business, purchase property or equipment, etc. You can make your business successful and achieve your goals with the help of business (corporate) loan.
Unsecured Loan
An unsecured loan is a loan that is given without pledging any property. It is given only when the bank or NBFC is confident that the borrower is capable of repaying. Unsecured loan is available faster than secured loan as it involves less paperwork. The interest rate of unsecured loan is usually higher than secured loan as the loan company has to take more risk in giving it.
Personal Loan
Personal loan is a type of loan that you can take for any personal work. Such as expenses on occasions like marriage, birthday, home repair, travel, medical related expenses, etc. If you need a personal loan of up to ₹5 lakh from Zipe in 6 minutes, instantly. You can use this money for any need.
Vehicle Loan
Vehicle loan, also known as vehicle loan, allows you to buy your favorite bike, car, scooter or any other type of vehicle. You can take vehicle loan for both new and old vehicles. Vehicle loans are of both secured and unsecured types. The monthly installment of the loan should be such that you can easily repay it.
What are the types of personal loans?
One feature of personal loan is that it is quick and easy to get as compared to other loans. You can also take it through the app of a bank or NBFC. If you take an instant loan from Zip, you do not need to submit any documents. As soon as you complete the application process, the loan is approved in less than 60 seconds. Let’s know the different types of personal loans:
Education Personal Loan
If you need money to pursue education, then education personal loan is a great option for you. You can cover the following expenses with this loan amount: living expenses, stationery, tuition fees, purchasing books, transportation expenses, etc.
Home Renovation Personal Loan
If your home needs some repairs or renovation and you are short of money, then a personal loan can be taken for home renovation. You can bear the expenses of repairs, buying new furniture, installing new tiles, etc. with this loan. Personal loan is also a good option for unexpected expenses related to the house, as it is quick and easy to get.
Travel Personal Loan
If you have to go on a trip with family or friends and are short of money, then a travel personal loan can help you. Through instant loan, you can pay for tickets, accommodation, and other travel expenses. After the trip is over, you can repay the loan in easy installments.
Wedding Personal Loan
Wedding is one of the biggest occasions in any person’s life. If you want to raise money for your dream wedding, then a personal loan can prove to be helpful for you. If you apply for a loan through Zippay, the money will be immediately credited to your account. You can use this amount to pay for hotel expenses, catering, gifts, etc.
Medical Personal Loan
If you have any anticipated or unexpected medical expenses, a personal loan can be an easy and quick way to go. Many loan apps like Zipp offer instant approval, ensuring you don’t run out of money.