June 22, 2024

In recent times we have seen that there has been a noticeable increase in consumers applying for loans like short term loans, personal loans, business loans etc. More and more people are taking loans to get over a tough financial time. With the increase in demand for loans among individuals, there has been an increase in competition among industries who offer the loan. This should be taken as the positive result for the consumer, who should take advantage of this fact and make it work in his/her favour.

As today many banks and financial institutions offer the different type of loans to their customer, it sometimes becomes difficult for customers to know exactly which loan to apply for. The following points mentioned below will explain you clearly about the different types of loans and their purpose.

Business Loans

Business loans are those loans that are given to individuals who are in urgent need of money to finance their business, extend their business or are starting their own business.  With the easy availability of Business loans in India, one can get the business loan in Gurgaon, Delhi, Noida and various other places in India. Business loans have a fixed repayment schedule and an interest rate that is either fixed or floating. Repayment of business loans may be due monthly or quarterly. The minimum time limit for repayment of a term loan in India is anywhere from 2 years to 10 years.

Business loans are of different types such as working capital loans, accounts receivable loans, and business only loans.

  • Working capital loans are the type of loans which individuals think of when they consider getting a business loan. These sorts of loans are taken by organizations to cover accounts payable, compensation and so forth. Organizations which have the great measure of sales yet because of back off in the business are unequipped for financing their daily operations requires these sorts of loans. These sorts of loans come in two kinds, secured loan and unsecured loan.
  • Accounts receivable loans are the short-term type of finance available when you are in a tough situation, however, you will get cash at a specific time which you will pay back. Interest rates on these short-term loans are normally higher than a long-term standard loan. These sorts of credits ought to be taken in instances of emergency, for example, when you have to meet payroll, require back to pay wages or some other necessities.
  • Business only loans are the type of loan that is connected to using the capital and assets of the business alone and no personal credit or record as a consumer of the proprietor. It is only available to a business with a solid record of dependable income, the whole deal prospect of liquid activity, and extremely solid business credit scores.

Personal Loans

Personal loans are money borrowed from a financial institution or a bank for personal use. In nearly all cases a personal loan is going to be unsecured, which also means you will also need to pay a premium for interest. Once a personal loan is given, you have to repay it by making monthly repayments to the lender. In this sense, it is also called as the multi-purpose loan.

There are two types of personal loans and they are secured personal loans and unsecured personal loans.

In secured personal loans, you need to put up an asset as security so as to get money from a lender. As security for the bank or any financial institution, you can offer your car, jewellery or any valuable property as collateral.

In the unsecured personal loan, you do not require to submit an asset to a bank or financial institution for security. Which means if you don’t have a car, jewellery or any such valuable item, then also you can take an unsecured loan?  You just need to convince the lender that you can repay the amount by providing evidence of your income through pay slips.

Home Improvement Loans

Home improvement loans are loans that are taken to improve your home. In most cases a home improvement. In most of the cases, home improvement loan is granted on the condition that you will give the lender a second rank mortgage on your home. Home loans usually need to be paid in monthly instalments.

Auto Loans

Auto loans are the type of loans where you borrow money from a bank or financial institution in order to buy a car or vehicle. With wide popularity and demand for the car or heavy vehicle loan, many lenders today are offering cheapest car loan rates to their customer. And this can really be helpful to individuals who are urgent need of a four-wheeler. In most of the automobile loans, one needs to repay in monthly instalments.

In some cases, despite the fact that not generally, the most lenders will secure your loan with the vehicle, which implies on the off chance that you can’t repay the loan they’ll repossess your automobile.

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