What are the popular secured loans?
What's the story
In India, secured loans are a popular option for those looking to borrow money against collateral. These loans usually come with lower interest rates than unsecured ones, making them an attractive option for many. Here, we take a look at five popular secured loans in India, their features, and how they can benefit borrowers looking for financial assistance.
#1
Home loan: A long-term investment
Home loans are one of the most common secured loans in India. Borrowers can take a loan by mortgaging their property/home. The tenure of home loans can go up to 30 years, giving borrowers a chance to repay in easy installments. The interest rates are usually between 6.5% and 8.5%, depending on the lender and borrower's credit profile. This makes it an attractive option for those looking to buy a home.
#2
Loan against property: Unlocking value
A loan against property allows borrowers to use their residential or commercial property as collateral. This type of loan is ideal for those who need funds without selling their assets. The loan amount can be up to 60% to 70% of the property's market value, with interest rates ranging from 8% to 10%. The tenure usually ranges from five to 15 years, making it flexible for different financial needs.
#3
Car loan: Financing your vehicle
Car loans are specifically designed for financing vehicles by using them as collateral. These loans usually cover up to 90% of the vehicle's on-road price with repayment tenures of one to seven years. Interest rates vary between 7% and 10%, depending on factors such as the lender and borrower's creditworthiness. This option makes it easier for people to own vehicles without putting too much financial strain.
#4
Gold loan: Quick access to funds
Gold loans provide quick access to funds by pledging gold ornaments or coins as collateral. They are ideal for those who need immediate cash without going through lengthy procedures. Borrowers can get up to 75% of the gold's market value, with interest rates ranging from 7% to 12%. The tenure is usually short, between six months and three years, making it a convenient option for short-term financial needs.
#5
Personal loan against fixed deposit: Leveraging savings
Personal loans against fixed deposits allow individuals to borrow against their existing savings accounts at banks or financial institutions. This way, they can get a loan without breaking their deposits prematurely. The amount sanctioned is usually up to 90% of the deposit's value, with interest rates slightly higher than the FD rate, typically around 1% to 2% above the deposit rate. The tenure matches that of the FD, usually ranging from one to five years.