What is Loan?

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

One of the reasons for boom in Indian economy is that now a days loans are easily available and the rate of interests at which they are available are very reasonable. Banks are giving loan for and loan against any and every thing. Government too is encouraging people to take loans for certain purposes. For example, government is encouraging people to take housing loans by giving tax concessions.

Loans available in India

Home Loans India

To have one's own home is the dream of every person. Now that getting a home loan is so easy it seems everyone can fulfill his / her long cherished dream.

Types Of Home Loans

  • Home Purchase Loans
  • Home Improvement Loans
  • Home Construction Loan
  • Home Extension Loan
  • Home Conversion Loan
  • Land Purchase Loans
  • Bridge Loans
  • Balance Transfer Loans
  • Refinance Loans
  • Stamp Duty Loans
Auto Loans India

With a plethora of auto loans opportunities available these days, it is now possible for you to buy your dream car.

General Features

  • In case of a new car, loan amount is up to 90% of cost of the car.
  • In case of used car, loan amount is up to 80% of the car.
  • The maximum loan amount is up to 3 times the annual salary (for salaried professionals) or 6 times the annual income (for self employed professionals).
  • Banks generally offer a preferential treatment to their existing customers. If you have savings or current account with a bank, it is easier to get the loan and you might also get preference in terms of rate of interest.
  • Loan is given for a period of 1 to 5 years.
Business Loans India

Business loans are available to self employed professionals, firms and corporations, to meet their operating expenses, finance capital expenditure (or acquisition of fixed assets) towards starting or expanding a business. Even industrial units are given business loans, to swap existing high-cost debt from other bank / financial institution. Apart from providing funding, bank can also issue letters of credit or give a guarantee, on behalf of the customer, to the suppliers and even government departments, for the procurement of goods and services on credit.

Types of Business Loans

  • Professional Loans
  • Trade Loans
Education Loans India

Education is the essence of life. To ensure that no deserving student is denied education for want of funds government is promoting education loans in a big way.

General Features

  • The exact rate of interest for education loan differs from one bank to the other. However, it usually varies from 10 to 15 percent.
  • Apart from the fee of the course, a list of other expenses is also covered by education loans. However, the list depends upon the bank from which you are taking the loan.
  • Education loan can be offered at fixed as well as floating interest rate. The interest is usually charged on a daily or monthly reducing balance.
  • Generally, nationalized banks have been seen to offer variable interest rates, while private and foreign banks charged fixed interest rates on education loans.
Marriage Loans India

Marriage is one of the most important events in a person's life. You want to make sure that all the arrangements are perfect and match the occasion.

General Features

  • Loan processing charges are generally levied, equivalent to 2% to 3% of the loan amount.
  • Prepayment of the loan is possible after 180 days of availing the loan. In this case, certain charges are levied, as per the bank's norms.
  • The maximum limit of marriage loan is Rs. 2 to 3 lakh, varying from one bank to the other.
Personal Loans India

Personal loan is an unsecured loan that does not require any security for borrowing money. Personal loans help you to take care of your immediate requirements without much of a hassle.

Types of Personal Loans
  • A secured loan
  • An unsecured loan i
Loans against home

Loan against home connotes a loan that is given or disbursed against the mortgage of home. The loan against property is given as a certain percentage of market value of the property.

General Features
  • Generally, loan processing charge of 2% is levied.
  • Pre-payment is allowed after 6 months. Generally, prepayment charge equivalent to 4% of the outstanding principal is levied.
  • In most of the cases, the minimum amount of loan against property is Rs 25,000 and the maximum amount is Rs 1.5 crore (Rs 15 million).
  • The charges that might apply in case of loan against property are processing fee, pre-payment fee, charges for changing from fixed to floating rate of interest and charges for changing from floating to fixed rate of interest.
Loans against auto

Loan against auto is available in the form of overdraft against car. The rate of interest is lower than interest in case of personal loan.

Loans against shares

It is advisable to take loan against equity (shares & debentures) only when you are expecting a certain sum of money a few months down the line and you need some funds in the interim.

General Information
  • The amount of loan that can be availed under "Loans against Shares" depends on the form of shares– physical or demat. A minimum amount of Rs. 100,000 has to be taken under the scheme. As for the maximum amount, it is up to Rs. 10,00,000 for physical shares and up to Rs 20,00,000 for Demat shares.
  • The rate of interest that is charged on loan against shares usually ranges between 15% and 18.5%. An extra interest of 2% p.a. might also be charged on the amount by which your outstanding amount exceeds the limit and for the period it is in excess.

 

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