Which Loan Is Right For You?

While exploring loan choice you should first know the types of loans that are available. Read to select the loan that fits your needs!

15 Sep,2022 11:31 IST 147
Which Loan Is Right For You?

There are three vital parts of a loan: Principal amount, interest rate, and tenure. While applying for a loan, you must consider the loan type, as every loan provides different benefits and reliefs.

So, which loan is the right loan for you?

Types of Loans

A. Secured Loans

This loan type involves borrowers surrendering some form of collateral.

• Home Loan:

Home loans are available at a lower interest rate, typically between 6.65-12% per annum. The maximum loan amount depends on age, income, credit history, etc.

• Loan Against Property:

You can take a loan against property while simultaneously using it. You can get a loan of up to Rs. 25 crores with an interest rate ranging between 8-25% per annum.

• Loan Against Insurance Policies:

In a financial emergency, you can get a loan of up to 85-90% of the insurance policy's surrender value, with interest rates ranging between 8.90-13% per annum.

• Gold Loans:

For short-term requirements, gold loans are available for up to 75% of gold's value at a 7.35% to 29% interest rate.

• Loan Against Financial Assets:

Instead of liquidating mutual funds, shares or fixed deposits, you can take a loan by pledging them. The interest rates on loans against FD (1-2% + FD rates) and loans against mutual funds (6-13.25%) differ. The maximum amount you can borrow varies among lenders.

B. Unsecured Loans

This loan type does not require borrowers to surrender any collateral.

• Personal Loan:

If you are looking for funds to meet personal expenses, you can consider a personal loan, with interest rates ranging between 7.90-49% per annum. The maximum loan amount differs among lenders.

• Business Loan:

To meet the business's daily expenses or expansion requirements, business loans are available with interest rates ranging between 10-26% per annum. The maximum loan amount differs among lenders.

• Flexi Loan:

If you are looking for a personal loan with a relaxed payment schedule, a Flexi loan is a perfect option. Interest rates on such loans start from 12% per annum onwards. The maximum loan amount varies among lenders.

• Education Loan:

To meet education expenses, you can consider an education loan with an interest rate between 5-17%. You don't require any collateral for educational loans up to Rs. 4,00,000.

• Vehicle loan:

A vehicle loan is the right option if you want to buy your dream vehicle. The interest rates for car loans range from 6.65-14%. The maximum amount of a car loan generally depends on the on-road price of cars.

There are various loan options available, whether it is for personal reasons or business growth. Read about what the market offers and choose the most suitable loan that suits your requirements.

FAQs

Q1. What collaterals are accepted for a secured loan?
Ans. Some acceptable collateral for a secured loan include personal real estate, personal vehicles, home equity, investment accounts, paychecks, art, precious metals, etc. It varies based on the loan type.

Q2. Can a borrower take two loans for a single purpose?
Ans. Yes, a borrower can take two loans. If they have a sound credit score, the bank may offer him a personal loan in addition to a home loan.

Q3. What assets are permitted while taking a loan against financial assets?
Ans. Some financial assets that one can pledge to get a loan include fixed deposits, mutual funds, equity, etc.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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