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7 Types Of Loans You Should Know About

7 Types Of Loans You Should Know About

Getting a loan has become quite easy these days. They help you in getting through the different financial difficulties you face in your life. However, loans are divided into various categories to serve specific ends. You will do well to know briefly about them so that you can use the right one for a given purpose.

There are two types of loans in banks: secured and unsecured. Secured loans are those loans for which you have to put some assets as collateral. The unsecured loan, on the other hand, refers to the type of loan where you do not have to place any asset as collateral and you can get the loan just with the help of your credit score and monthly income.

You can also check out the types of NBFC loans for better comparison.

Types Of Loans In Bank

Following are the types of loans in bank and NBFCs you can get:

Home Loans

As the name suggests, home loans are availed to buy a new house. With the help of this loan, you will not have to delay your plans for getting a new home for yourself. Although the loan is primarily taken to get a new house, you can also do it for purposes related to the home like home renovation or construction.

Gold Loans

Gold loans are one of the safest modes of generating funds. You can get the cash amount just by putting your gold as collateral. Although, the total amount to be received will not be more than 75% of the total value of the gold deposited.

Against Shares and Other Securities

You can use your investment shares or mutual fund units to get a loan. Thus, your shares do not have to be merely limited for the purpose of investment. You can use them for raising immediate funds as well. The total value of your shares deposited will be the amount you can get as a secured loan.

Against Insurance

Although only limited to certain policies, but you can your insurance policies to get a loan.

As far as unsecured loans are concerned, you can get the following the types of loans in the bank.

Personal Loans

Personal loans are the most popular form of unsecured loans. You can use the personal loan to serve multiple purposes and that too without needing to put any asset as collateral. Given below are the purposes for which you can use the personal loan:

Medical Emergencies

Medical emergencies can occur at any point in time. It is always better to be prepared beforehand. But if the expenses exceed your savings you can always use the option of a personal loan to get immediate money.

Educational Expenses

Education is something you should never compromise upon. Since the expense of education can destabilise your monthly budget, a personal loan can manage that for you.

Wedding Ceremonies

A wedding is once in a lifetime opportunity. Therefore, you should not spare any expense or compromise on your dream wedding. A personal loan ensures that you get your dream fulfilled in a preferred grand manner without waiting for funds any longer.

Short-term Business Loans

Short-term business loans are used to cover or manage the day-to-day expenses incurred in the business.

Flexi Loans

With a flexi loan, you will only have to pay interest for the loan amount which has been put to use.

An important thing to note about both secured and unsecured loans is that you should be maintaining a minimum credit score of 650 to get decent offers and discount interest rates on your loan. These types of loans in bank and NBFCs can also be availed online so that you do not have to leave your home to get the loan amount in your bank account.