Before applying for a loan, read this guide
What's the story
Navigating the world of loans can be tricky, especially with so many options available. In India, knowing the different types of loans can help you make informed financial decisions. This guide simplifies the various loan types available in India, from personal loans to home loans, and what they entail. Knowing these can help you choose the right loan for your needs.
#1
Personal loans: Quick and flexible
Personal loans are unsecured loans that can be used for a variety of purposes, be it medical expenses or travel. Since they are unsecured, you don't have to provide collateral. The loan amount usually ranges from ₹50,000 to ₹20 lakh, and the tenure can be anywhere between one year to five years. However, interest rates may vary between 10% to 24% depending on your credit score.
#2
Home loans: Investing in property
Home loans are meant for those looking to buy or construct a house. The loan amount can go up to 90% of the property's value, and the tenure can go up to 30 years. Since these loans are secured against the property itself, they usually come with lower interest rates (7% to 9%) as compared to other types of loans.
#3
Auto loans: Financing your vehicle
Auto loans are specifically for purchasing vehicles like cars or bikes. These loans usually cover up to 90% of the vehicle's on-road price with tenures ranging from three years to seven years. Interest rates generally lie between 9% and 14%, depending on factors like down payment and borrower's credit profile.
#4
Education loans: Funding your studies
Education loans help students cover tuition fees and other educational expenses. They are available for both domestic and international courses. The amount can range from ₹20,000 to ₹50 lakh based on course type and institution reputation. Repayment periods can extend up to 15 years with interest rates varying between 9% and 12%.
Tip 1
Business loans: Supporting entrepreneurship
Business loans provide financial support for starting or expanding a business without having to give up equity stakes in your company. These can be secured or unsecured, with amounts ranging from ₹1 lakh to ₹5 crore, depending on business needs and creditworthiness. Interest rates typically range between 11% and 18%, with tenures varying from one year to five years.