Types of Loans offered in the Indian Market
With intimidating lifestyles and increasing basic needs, loans are no more considered a debt. They have gradually obtained an ‘accepted’ status in the Indian market. The reasons for this is the low-interest rates, easy availability and easy returns. Broadly classified, loans are of two types, Unsecured and Secured. Unsecured loans are the ones for which the borrower does not have to present any collateral. Secured loans are loans against property.
Find out the reasons and the kinds of loans banks give:
· Personal Loans: Personal loans are generally unsecured loans and have a high rate of interest. All that the lender/bank has to do is to get an identification proof and few other easily accessible documents to complete the formalities. Such loans are predominantly not very large and are taken to manage some personal expenses such as buying television, or managing the month’s expenses like paying bills and fee.
· Small Business Loans: Capital is the most vital aspect of any new business. Therefore, venturing into a new business requires these loans. Today, you can observe such loans in every part of the country, although the number of business loans in Delhi, Mumbai and other metro cities is higher, such small business loans are equally popular in tier two cities. So if you have a well-planned approach and a policy that will ascertain success, you must opt for this loan. This is a collateral loan as local banks or Small Business Administration cannot undertake risks associated with it.
· Credit Card: Evolution of plastic money has allowed people to get what they want and not what is necessary. Therefore, a judicious thought process and meticulous planning are the foremost traits that you must possess in order to buy credit cards. As they come with a certain fee and failing to pay those build arrears that may burn a hole in your pocket. Besides this, a failure to repay any of the credit card bills also depletes your credit score.
· Home Equity Loans: These are low interest home loans wherein as a borrower you have to give a property as collateral. Although the interest is low, the principal cost here is high and failing to pay leads to a large sum as an outstanding amount.
Loans are worth taking if you are a good planner and have control over your expenses. It is purely in your hand to make any loan a boon or a bane.