In India, a wide range of bank loans are available to meet the diverse financial needs of individuals and businesses. Here’s an overview of the most common types of loans:
1. Personal Loan
- Purpose: For personal use such as medical emergencies, weddings, travel, or any other personal expenses.
- Eligibility: Salaried professionals, self-employed individuals, or business owners.
- Collateral: No collateral required (unsecured loan).
- Interest Rate: Higher compared to secured loans.
2. Home Loan
- Purpose: For purchasing a home, constructing a house, or renovating existing property.
- Eligibility: Salaried and self-employed individuals.
- Collateral: Property being purchased or constructed is usually the collateral.
- Interest Rate: Lower interest rates; available as floating or fixed rates.
3. Car Loan / Vehicle Loan
- Purpose: For purchasing a new or used vehicle.
- Eligibility: Salaried professionals, self-employed individuals, and businesses.
- Collateral: Vehicle purchased is typically the collateral.
- Interest Rate: Moderate, depending on the vehicle type and tenure.
4. Education Loan
- Purpose: To finance higher education in India or abroad.
- Eligibility: Students or their guardians; course approval from recognized institutions is required.
- Collateral: Loans above a certain limit may require collateral.
- Interest Rate: Competitive, with flexible repayment terms, often starting after course completion.
5. Gold Loan
- Purpose: Short-term needs like business funding, medical emergencies, etc.
- Eligibility: Any individual with gold assets.
- Collateral: Gold jewelry or ornaments.
- Interest Rate: Lower due to secured nature.
6. Business Loan
- Purpose: For business expansion, working capital, purchasing machinery, etc.
- Eligibility: Entrepreneurs, small and medium enterprises (SMEs), and corporate entities.
- Collateral: Can be secured (backed by assets) or unsecured.
- Interest Rate: Depends on the type of loan (working capital, term loan, etc.) and the nature of the business.
7. Loan Against Property (LAP)
- Purpose: For personal or business use, based on the value of your property.
- Eligibility: Individuals or businesses owning residential, commercial, or industrial property.
- Collateral: Property is mortgaged as collateral.
- Interest Rate: Lower, as it is a secured loan.
8. Agriculture Loan
- Purpose: For farmers to buy seeds, fertilizers, equipment, or livestock.
- Eligibility: Farmers or agricultural workers.
- Collateral: Can be secured or unsecured, depending on the amount.
- Interest Rate: Often subsidized by the government.
9. Overdraft Facility
- Purpose: Provides access to extra funds up to a specified limit, linked to savings or current accounts.
- Eligibility: Salaried individuals or businesses.
- Collateral: Secured by assets or property in some cases.
- Interest Rate: Charged only on the used overdraft amount.
10. Consumer Durable Loan
- Purpose: To purchase consumer goods like electronics, appliances, etc.
- Eligibility: Individuals looking to buy consumer goods on installment.
- Collateral: No collateral required.
- Interest Rate: Often comes with zero or low interest during festive seasons.
11. Credit Card Loan
- Purpose: Short-term loan against credit card limits for emergencies.
- Eligibility: Credit card holders.
- Collateral: No collateral required.
- Interest Rate: High, as it’s an unsecured loan.
12. Mudra Loan
- Purpose: For small and micro-businesses under the Pradhan Mantri Mudra Yojana (PMMY).
- Eligibility: Entrepreneurs or small businesses.
- Collateral: No collateral required.
- Interest Rate: Moderate, designed to support small enterprises.
13. Microfinance Loans
- Purpose: Small loans for individuals in low-income groups, often used for small businesses.
- Eligibility: Low-income individuals and rural populations.
- Collateral: No collateral required.
- Interest Rate: Moderate to high, with easier access for underserved groups.
14. Top-Up Loan
- Purpose: For existing home loan borrowers needing additional funds.
- Eligibility: Home loan borrowers with good repayment history.
- Collateral: Property mortgaged under the home loan.
- Interest Rate: Lower than personal loans.
15. Pradhan Mantri Awas Yojana (PMAY) Loan
- Purpose: To help first-time home buyers in urban areas.
- Eligibility: Individuals meeting specific income criteria under the PMAY scheme.
- Collateral: Property purchased under the loan.
- Interest Rate: Subsidized as part of government initiatives.
Each loan type comes with different interest rates, tenures, and eligibility criteria, and the choice depends on the borrower’s financial needs and capabilities.
