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What's the story
The world of loans in India can be a confusing place, particularly for first-time borrowers. This article demystifies the process, providing a comprehensive breakdown of the major types of loans available in India and shedding light on their unique features. Whether you're dreaming of buying a home, investing in your education, or just need a personal loan for emergencies, knowing your options is key to making the right choice.
Home loan
Home loans: Foundation of your dream home
Home loans are the most popular loans that individuals in India opt for. They are specifically meant for buying new homes or building properties. These loans typically cover 75% to 90% of the property's value, and the repayment tenure can be anywhere between five and 30 years. Interest rates vary depending on the lender and your creditworthiness, but they typically range between 6.5% and 8%.
Education loan
Education loans: Investing in your future
Education loans are designed for students who wish to pursue higher education in India or abroad. These loans can be used to pay for tuition, books, lodging, and other education-related expenses. The loan amount can be as high as ₹1 crore for foreign studies and ₹50 lakh for domestic studies. Repayment typically begins six months to one year after course completion, allowing time to secure employment.
Personal loan
Personal loans: For immediate financial needs
Personal loans are unsecured, providing financial assistance without the need for collateral. They can be used for a wide range of purposes including medical emergencies, weddings, vacations, or for consolidating existing debt. Loan amounts range from ₹50,000 to ₹40 lakh. Repayment tenures vary between one to five years. Owing to the lack of collateral, interest rates are relatively higher, ranging from 10% to 24%.
Vehicle loan
Vehicle loans: Drive your dream car or bike
Vehicle loans are secured against the vehicle you want to buy and can be availed for both two-wheelers and four-wheelers. These loans typically fund up to 80%-90% of the on-road price of the vehicle, with tenures ranging up to seven years for cars and five years for two-wheelers. Interest rates depend on your income bracket, type of vehicle, and loan tenure but usually fall between 7% and 15%.
Business loan
Business loans: Fueling growth ambitions
Business loans offer financial assistance to start a new business or grow an existing one. They can be secured or unsecured, depending on whether you can provide collateral. Loan amounts vary from ₹50,000 to multiple crores, serving diverse business requirements. Repayment tenures range from one year to five years or more, depending on the lender's conditions.