Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 1L+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below
Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Trusted by 3 Crore+ Indians
Want to Achieve any of the below Goals upto 80% faster?
Dream Home
Dream Wedding
Dream Car
Retirement
1st Crore
Various Types of Loans in India
Various Types of Loans in India
Loans serve as an essential financial tool, providing capital borrowed from banks or financial institutions. These institutions charge interest on the borrowed amount for a predetermined period. For some individuals, loans serve as a lifeline during emergencies, while for others, loans act as catalysts for growth and expansion. The purpose and type of loan availed by the borrower significantly influence the impact and benefits derived from it. Here, we delve into the different types of loans available in India, provided by banks and financial institutions, to give a comprehensive understanding of their features and benefits.
Different Types of Loans in India
Secured Loans
Secured loans are those loans that are provided against security or collateral. Borrowers need to furnish an asset as security to avail of these loans. Since lenders face a lower risk of default by the borrower, secured loans typically come with lower interest rates. If the borrower fails to repay the loan, the lender can sell the asset to recover its dues. Below are some common types of secured loans:
Home Loans
Home loans are among the most common types of secured loans. These loans are availed for purchasing or constructing a home. The home itself acts as security for the lender. Depending on the borrower's profile and the home valuation, lenders may also require additional collateral. Home loans are long-term loans, with tenures ranging from 10 to 25 years. The interest rates for home loans typically start from 7% to 7.5% per annum, and borrowers repay the loan through Equated Monthly Installments (EMIs). The Loan-to-Value (LTV) ratio is usually 80%, meaning borrowers can avail loans up to 80% of the property value.
Gold Loans
Gold loans are secured against the gold owned by the borrowers. Borrowers can pledge their gold with the lender and avail of funds. The lender retains possession of the gold until the loan is repaid. The interest rates for gold loans start from 7.50% per annum. Most lenders require borrowers to pay only the interest on the loan amount each month, with the principal repaid at the end of the term. The LTV on gold loans can go up to 90%.
Vehicle Loans
Vehicle loans are secured loans taken for purchasing vehicles, including passenger cars, commercial vehicles, and two-wheelers. The vehicle itself acts as the primary security for the lender. In case of non-repayment, the lender can seize the vehicle. The interest rates for vehicle loans typically range from 7% to 7.5% per annum. The LTV can vary, with some lenders offering up to 100% of the vehicle's value.
Loan Against Property
Loans against property (LAP) allow borrowers to avail funds by mortgaging their property with the lender. These loans can be availed against residential or commercial properties. The LTV for LAP ranges between 65% to 70%, with interest rates starting from 8% per annum. The funds can be used for both business and personal purposes.
Loan Against Securities
Investors can borrow money against their investments in shares, mutual funds, bonds, and debentures. Given the volatile nature of securities, the LTV for these loans is typically 50% of the security value. Interest rates for loans against securities can start from 7.50% per annum.
Title Loans
Title loans are secured loans where borrowers can borrow up to 25% to 50% of their vehicle's value by handing over the vehicle as collateral. The possession remains with the borrower, but in case of default, the lender can seize the vehicle. These loans are usually short-term, often for as little as 30 days, with very high interest rates, typically 25% per month (300% per annum).
Non-recourse Loans
Non-recourse loans are secured loans where borrowers provide collateral, but the lender cannot pursue the borrower beyond the collateral if the loan is not fully repaid. The LTV for non-recourse loans can be between 60% to 80%.
Loan Against Fixed Deposits
Banks offer loans against fixed deposits, with the fixed deposit acting as primary security. Borrowers can avail loans up to 60% to 75% of the FD value. Interest rates for loans against FD are slightly higher than the FD rate, typically 1% to 2% higher.
Loan Against Insurance
Loans against insurance policies can be availed if the policy has a surrender value. The LTV for these loans is between 85% to 90%. Interest rates range from 10% to 12% per annum.
Working Capital Loans
Working capital loans help businesses meet their short-term financial needs. The amount depends on the business's working capital, which includes creditors, debtors, and stock. Interest rates for these loans start from 12% per annum.
Unsecured Loans
Unsecured loans are provided based on the borrower's income and creditworthiness, without any collateral. These loans carry higher interest rates due to the increased risk to the lender. Here are some common types of unsecured loans:
Personal Loans
Personal loans are popular unsecured loans used for various purposes, including medical emergencies, weddings, education, or travel. The loan amount depends on the borrower's income and credit score. Interest rates for personal loans range from 8% to 10% per annum.
Short-term Business Loans
Short-term business loans help businesses overcome financial crises. These loans are based on the profitability of the business and the borrower's profile. Interest rates range from 12% to 18% per annum.
Education Loans
Education loans provide financial assistance for higher education. The loan amount depends on the cost of education, with interest rates starting from 8.85% per annum. Repayment usually begins 12 months after completing the education.
Credit Cards
Credit cards offer a line of credit for purchases, with the option to convert outstanding balances into loans. Credit cards are unsecured and carry high interest rates, ranging from 18% to 36% per annum.
Avail Instant Loans from Bank of Baroda (BOB)
Bank of Baroda (BOB) is one of the premier banking institutions in India, offering a wide range of secured and unsecured loans. Here are some key details about BOB's loan offerings:
Home Loans
Eligibility: Indian residents, NRIs, PIOs, and OCIs.
Minimum Age: 21 years; Maximum Age: 70 years.
Loan Tenure: Up to 30 years.
Interest Rates: Starting from 8.25% per annum.
Gold Loans
Eligibility: Individuals owning gold jewelry or coins.
Loan Amount: Up to Rs. 25 lakhs.
Interest Rates: Starting from 9.75% per annum.
Vehicle Loans
Eligibility: Salaried employees, professionals, businessmen, NRIs, and PIOs.
Loan Amount: Varies based on income.
Interest Rates: Starting from 8.50% per annum.
Loan Against Property
Eligibility: Resident and non-resident individuals.
Minimum Gross Annual Income: Rs. 3 lakhs (residents), Rs. 5 lakhs (NRIs).
Interest Rates: Starting from 10.20% per annum.
Loan Against Securities
Eligibility: Individuals engaged in profitable business.
Interest Rates: Starting from 9.25% per annum.
Personal Loans
Eligibility: Salaried employees, insurance agents, self-employed professionals and businesspersons.
Interest Rates: Starting from 10.25% per annum.
Education Loans
Baroda Vidya: For school education.
Baroda Scholar: For higher education abroad.
Baroda Gyan: For technical and professional courses.
Interest Rates: Starting from 8.85% per annum.
Conclusion
Loans play a pivotal role in meeting various financial needs, from buying a home or vehicle to funding education or business expansion. Understanding the different types of loans and their features can help borrowers make informed decisions and choose the best loan option that suits their requirements. Bank of Baroda offers a diverse range of loan products with competitive interest rates and flexible terms, making it a preferred choice for many borrowers. Whether you need a secured or unsecured loan, BOB has a solution to meet your financial needs.
Loans serve as an essential financial tool, providing capital borrowed from banks or financial institutions. These institutions charge interest on the borrowed amount for a predetermined period. For some individuals, loans serve as a lifeline during emergencies, while for others, loans act as catalysts for growth and expansion. The purpose and type of loan availed by the borrower significantly influence the impact and benefits derived from it. Here, we delve into the different types of loans available in India, provided by banks and financial institutions, to give a comprehensive understanding of their features and benefits.
Different Types of Loans in India
Secured Loans
Secured loans are those loans that are provided against security or collateral. Borrowers need to furnish an asset as security to avail of these loans. Since lenders face a lower risk of default by the borrower, secured loans typically come with lower interest rates. If the borrower fails to repay the loan, the lender can sell the asset to recover its dues. Below are some common types of secured loans:
Home Loans
Home loans are among the most common types of secured loans. These loans are availed for purchasing or constructing a home. The home itself acts as security for the lender. Depending on the borrower's profile and the home valuation, lenders may also require additional collateral. Home loans are long-term loans, with tenures ranging from 10 to 25 years. The interest rates for home loans typically start from 7% to 7.5% per annum, and borrowers repay the loan through Equated Monthly Installments (EMIs). The Loan-to-Value (LTV) ratio is usually 80%, meaning borrowers can avail loans up to 80% of the property value.
Gold Loans
Gold loans are secured against the gold owned by the borrowers. Borrowers can pledge their gold with the lender and avail of funds. The lender retains possession of the gold until the loan is repaid. The interest rates for gold loans start from 7.50% per annum. Most lenders require borrowers to pay only the interest on the loan amount each month, with the principal repaid at the end of the term. The LTV on gold loans can go up to 90%.
Vehicle Loans
Vehicle loans are secured loans taken for purchasing vehicles, including passenger cars, commercial vehicles, and two-wheelers. The vehicle itself acts as the primary security for the lender. In case of non-repayment, the lender can seize the vehicle. The interest rates for vehicle loans typically range from 7% to 7.5% per annum. The LTV can vary, with some lenders offering up to 100% of the vehicle's value.
Loan Against Property
Loans against property (LAP) allow borrowers to avail funds by mortgaging their property with the lender. These loans can be availed against residential or commercial properties. The LTV for LAP ranges between 65% to 70%, with interest rates starting from 8% per annum. The funds can be used for both business and personal purposes.
Loan Against Securities
Investors can borrow money against their investments in shares, mutual funds, bonds, and debentures. Given the volatile nature of securities, the LTV for these loans is typically 50% of the security value. Interest rates for loans against securities can start from 7.50% per annum.
Title Loans
Title loans are secured loans where borrowers can borrow up to 25% to 50% of their vehicle's value by handing over the vehicle as collateral. The possession remains with the borrower, but in case of default, the lender can seize the vehicle. These loans are usually short-term, often for as little as 30 days, with very high interest rates, typically 25% per month (300% per annum).
Non-recourse Loans
Non-recourse loans are secured loans where borrowers provide collateral, but the lender cannot pursue the borrower beyond the collateral if the loan is not fully repaid. The LTV for non-recourse loans can be between 60% to 80%.
Loan Against Fixed Deposits
Banks offer loans against fixed deposits, with the fixed deposit acting as primary security. Borrowers can avail loans up to 60% to 75% of the FD value. Interest rates for loans against FD are slightly higher than the FD rate, typically 1% to 2% higher.
Loan Against Insurance
Loans against insurance policies can be availed if the policy has a surrender value. The LTV for these loans is between 85% to 90%. Interest rates range from 10% to 12% per annum.
Working Capital Loans
Working capital loans help businesses meet their short-term financial needs. The amount depends on the business's working capital, which includes creditors, debtors, and stock. Interest rates for these loans start from 12% per annum.
Unsecured Loans
Unsecured loans are provided based on the borrower's income and creditworthiness, without any collateral. These loans carry higher interest rates due to the increased risk to the lender. Here are some common types of unsecured loans:
Personal Loans
Personal loans are popular unsecured loans used for various purposes, including medical emergencies, weddings, education, or travel. The loan amount depends on the borrower's income and credit score. Interest rates for personal loans range from 8% to 10% per annum.
Short-term Business Loans
Short-term business loans help businesses overcome financial crises. These loans are based on the profitability of the business and the borrower's profile. Interest rates range from 12% to 18% per annum.
Education Loans
Education loans provide financial assistance for higher education. The loan amount depends on the cost of education, with interest rates starting from 8.85% per annum. Repayment usually begins 12 months after completing the education.
Credit Cards
Credit cards offer a line of credit for purchases, with the option to convert outstanding balances into loans. Credit cards are unsecured and carry high interest rates, ranging from 18% to 36% per annum.
Avail Instant Loans from Bank of Baroda (BOB)
Bank of Baroda (BOB) is one of the premier banking institutions in India, offering a wide range of secured and unsecured loans. Here are some key details about BOB's loan offerings:
Home Loans
Eligibility: Indian residents, NRIs, PIOs, and OCIs.
Minimum Age: 21 years; Maximum Age: 70 years.
Loan Tenure: Up to 30 years.
Interest Rates: Starting from 8.25% per annum.
Gold Loans
Eligibility: Individuals owning gold jewelry or coins.
Loan Amount: Up to Rs. 25 lakhs.
Interest Rates: Starting from 9.75% per annum.
Vehicle Loans
Eligibility: Salaried employees, professionals, businessmen, NRIs, and PIOs.
Loan Amount: Varies based on income.
Interest Rates: Starting from 8.50% per annum.
Loan Against Property
Eligibility: Resident and non-resident individuals.
Minimum Gross Annual Income: Rs. 3 lakhs (residents), Rs. 5 lakhs (NRIs).
Interest Rates: Starting from 10.20% per annum.
Loan Against Securities
Eligibility: Individuals engaged in profitable business.
Interest Rates: Starting from 9.25% per annum.
Personal Loans
Eligibility: Salaried employees, insurance agents, self-employed professionals and businesspersons.
Interest Rates: Starting from 10.25% per annum.
Education Loans
Baroda Vidya: For school education.
Baroda Scholar: For higher education abroad.
Baroda Gyan: For technical and professional courses.
Interest Rates: Starting from 8.85% per annum.
Conclusion
Loans play a pivotal role in meeting various financial needs, from buying a home or vehicle to funding education or business expansion. Understanding the different types of loans and their features can help borrowers make informed decisions and choose the best loan option that suits their requirements. Bank of Baroda offers a diverse range of loan products with competitive interest rates and flexible terms, making it a preferred choice for many borrowers. Whether you need a secured or unsecured loan, BOB has a solution to meet your financial needs.
Author
Pluto Team
Share with your friends
Help you friends in learning more about personal finance by share this blog.
Help you friends in learning
more about personal finance
by share this blog.
Help you friends in learning more about personal
finance by share this blog.
Silimar Blogs
Axis Bank Credit Card Net Banking
Axis Bank Credit Card Net Banking
August 5, 2024
PNB Fixed Deposit (FD) Interest Rates
PNB Fixed Deposit (FD) Interest Rates
August 5, 2024
Linking Aadhaar to Your Punjab National Bank Account
Linking Aadhaar to Your Punjab National Bank Account
August 5, 2024
PNB SIP Calculator
PNB SIP Calculator
August 5, 2024
How to Close a PNB Account Online & Offline?
How to Close a PNB Account Online & Offline?
August 5, 2024
TDS Refund - How to Claim TDS Refund
TDS Refund - How to Claim TDS Refund
August 5, 2024
View More
Download App
Explore More
Managing assets totalling over 1 crore+