Introduction
Loans and advances can be considered crucial financial instruments that individuals can opt to fulfill several kinds of fund shortages. Against such a financing loan, borrowers need to pay an interest charge at pre-discussed rates. One can segregate the popular types of loans into two categories. They are:
While secured loans are collateral-backed advances, the latter requires no security. Unsecured loans are thus borrowed solely based on one's eligibility and repayment capacity. Under secured loans, a lender holds ownership rights on the provided collateral until a borrower repays the amount. Nevertheless, there is no such possibility in all types of unsecured loans, thus reducing a borrower's risk significantly. So, here's a look at the various types of unsecured advances before moving on to their secured counterparts.
Different types of unsecured loansHere's a brief on some of the different kinds of unsecured loans extended in India:
Personal loan
A personal loan can be depicted as one of the most versatile types of loan, considering that it comes with no end-use restriction. A borrower can thus use it for any suitable purpose such as travel, education, wedding, business, etc. You can also suitably borrow a personal loan for a medical emergency.
Business loan
Business loans are extended to self-employed individuals to help them expand, renovate, or reorganize a business venture. Such loans could be short-term to meet various daily expenses of a business entity. Can also extend business loans based on the borrower's identity or business extent. For example, business loans for MSMEs, women entrepreneurs, start-ups, traders, service enterprises, etc., are some types.
If borrowers somehow do not stand eligible for these advances, they can apply for a personal loan and utilize it to introduce capital to the business.
Education loan
Students can avail of education loans to fund their higher studies in India or abroad. Such advances usually cover the course fees, accommodation charges, exam fees, and other related expenses of higher studies. Can avail such financing for full-time, part-time, or even vocational courses.
Professional loan
Professional loans like dedicated personal loans or business loans are extended to doctors, engineers, and chartered accountants to back their financial needs. As per the profession, the borrower must meet the relevant eligibility criteria to avail of such loans.
Among all the types of loans mentioned above, personal loans are among the most popularly available funding options in India. Funding of up to Rs.25 lakh can be conveniently availed as a personal loan.
Lending institutions like Bajaj Finserv provide flexible tenures of up to 60 months on advances like unsecured personal loans to make repayments convenient.
You can also avail of pre-approved offers from the lender if you are an existing customer and experience simplified and less-time consuming funding. These offers apply not just to personal loans but also financial products like business loans and credit cards. By providing your name and contact details, you can take a look at your pre-approved offer online.
Different types of secured loansCollateral-backed or secured loans can be of the following types:
Home loan
These loans are offered for a house purchase, house construction, or land purchase. These loans usually come with a higher principal as well as a long tenure.
One can, nevertheless, avail a personal loan suitably when he/she plans home renovation in quick steps.
Loan against property
Here, funds are offered in exchange for a mortgaged residential, industrial, or commercial property. The market value of that property determines the amount of loan which can be borrowed.
The availability of different loan options necessitates a borrower to ponder upon his/her funding requirements and avail of the relevant credit type. The risk factor, liabilities, attached benefits, repayment terms, conditions, etc., must also be considered before choosing the ideal loan option.
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