Loans are an essential part of any economy. A person needs a loan when he/she can’t fulfil their needs with the money they earn. Today we will tell you about various loans given by Indian banks. Various banks like SBI, PNB, HDFC, Bank of India, Axis bank, etc., provide loans as per requirement. Today we will discuss, What is a loan? How to take a loan? What are the types of loans? What are the interest rates on loans?
There are three types of loans given in India:-
- Short-term loan: The repayment period of a short term loan is less than one year
- Medium-term loan: The repayment period of a Medium-term loan is between one to three years
- Long-term loan: The Repayment period of a Long term loan is above three years
Personal Loan
A personal loan or unsecured loan means a loan taken for self. In a Personal Loan, Bank lends money to individuals based on their creditworthiness, and this loan does not require any collateral against the loan. Every bank has its fixed interest rate for a personal loan like SBI is charging a 17.65% annual interest rate for personal loans, and the Bank of India is 17.25%.
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It is also necessary to know that the interest rate of personal loans is higher than other loans. Because banks do not ask for many documents while giving a personal loan. They only see salary and credit score and issue the loan. You should take a personal loan only for the short-term requirement.
Gold Loan
A gold loan means taking cash in return for keeping gold in the bank. You have to keep the gold in the locker of bank. You get this type of loan on the quality and price of the gold deposited. Banks can give a loan of up to 80% of the value of gold. The interest rate charged on this loan is lower than that of a personal loan. SBI is charging an 11.15% annual interest rate on gold loans.
Loan Against Security
Loan Against Security means that when a bank gives a loan by keeping any security paper. But the question arises, what is a security paper? If you invest in shares, mutual funds, insurance schemes, bonds, then these can be your security papers, in return for which the bank will give you a loan. These papers or investments have value.
If you can’t repay the loan, the bank confiscates your security paper and sells them in the market. You can mortgage these security papers with the bank.
The bank gives you the facility of overdraft based on these papers. Overdraft means the facility to withdraw more money than you have in your account (even if zero rupees). You can withdraw the amount you need from your current account.
Property Loan
A property loan is a loan that we get against our property. We can repay this in a maximum of 15 years. Usually, the loan amount is 40-60% of the amount mentioned in the papers.
Home Loan
The loan taken to buy or built a house is called a home loan. You don’t take a loan just for the construction of a house. You can take a loan from a bank by adding the cost of house construction, house registration, stamp duty etc. The bank can give a loan of 75 to 85% of the total amount of your expenditure.
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Suppose you took a loan for a plot, whose value is six lakhs, then you give only 30% of 6 lakhs to the bank i.e., 1 lakh 80 thousand, and keep paying the remaining amount gradually till different levels of house construction. The repayment period can be from 5 years to 20 years. The terms of the loan also include some charges in addition to interest, such as process fees, administrative charges, legal fees, assessment fees etc.
Education Loan
It is not in the luck of every student to study from the desired institute. If someone wants to study at Oxford University, then he can face the problem of money. Not everyone comes from Ambani’s family. The fee would be so much that the thought of going there to study would be like making a fancy casserole.
In such a situation, they can apply for an education loan in the bank. The bank ensures the repayment of the education loan before giving it. Only qualified students get an educational loan.
Banks check whether they will earn by studying there or not. What is the ratio of campus selection there? After seeing all this, the bank approves the loan. After completing the studies, the student does the repayment. A guarantor is required to take a loan. The guarantor can be the guardian or relative of the borrower. Presently SBI offers 11.15% p.a. for student loans above 7.50 lac. and 10.85% p.a. for 7.50 lacs. Charging interest rate.
Vehicle or Car Loan
Banks often offer various schemes in loans to buy a car. These loans, like other loans, are offered at fixed or floating rates for varying periods. But, What is the fixed or floating rate?
Fixed-rate means a fixed interest rate. It means, the interest rate applicable at the time of borrowing the loan will be applicable till the end of loan repayment.
The floating rate is the rate that can change (more or less) when the time comes, and accordingly, the interest rate of your loan will continue to be more or less. Before giving the loan, the bank asks you whether you want to take a loan at a fixed or floating rate?
Till the full payment of a loan, the ownership of the car is with the bank. You will have to submit your salary slip and income tax return for the last two or three years in the bank. Apart from this, any identity proof and address proof have to submit to the bank. The interest rate and other charges for new cars are different from used cars.
Corporate loan
When the bank provides loans to big players like the Ambani brothers, Tata, Birla etc., it is called a corporate loan. According to the current rule, the bank can give a loan to anyone big company up to 55 per cent of the company’s total capital. But, because of the recent increase in defaulter cases, RBI has proposed that banks can give only 25% of their core capital to the corporate group. So, the risk can be minimized.
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