Loans are categorised into two main types: secured and unsecured. Secured loans, such as home, car, and gold loans, require collateral, offering higher amounts with lower interest rates. Unsecured loans, like personal, education, and business loans, rely on creditworthiness. Personal loans have no end-usage restrictions. While education loans cover tuition and living expenses, Business loans aid entrepreneurs, and professional loans assist individuals like doctors or chartered accountants. Additionally, balance transfer loans reduce interest by switching lenders, and top-up loans offer additional funds after repaying a portion of the existing loan. Parameters for these loans vary among lenders.
Loans can be categorised into two main types: secured and unsecured, based on the requirement of collateral
Secured loans, like home loans and car loans, involve pledging collateral, offering advantages such as lower interest rates and longer repayment tenures
Two-wheeler loans are secured by the on-road value of the vehicle, while Loan Against Property utilises residential or commercial property as collateral
Gold loans are determined by the loan-to-value ratio. This is calculated by dividing the loan amount by the pledged gold’s value
Secured loans have end-usage restrictions, limiting the purpose for which the loan can be used
Unsecured loans, such as personal loans and education loans, don't require collateral, relying on creditworthiness and eligibility
Personal loans offer flexibility as they have no end-usage restrictions, making them suitable for various financial needs
Education loans cover not only tuition fees but also accommodation and living expenses during the course
Business loans assist entrepreneurs in starting, managing, or expanding their businesses
Professional loans cater to specific needs like starting a medical or accounting practice
Balance transfer loans help reduce interest rates by transferring an ongoing loan to a lender offering a lower interest rate
Top-up loans allow obtaining additional funds over an existing loan after repayment for a specific period