TheFinQ.com is designed to be your one-stop destination for everything related to cards, loans, and investment products across India. We help you compare and choose the best financial products that suit your needs, including:
In India, people borrow money for many reasons – buying a house, paying for education, starting a business, or even handling a medical emergency. Banks and NBFCs (Non-Banking Financial Companies) offer many loans to help people in such situations. These loans can be divided mainly into two big categories – secured loans and unsecured loans.
Let us understand these two categories and explore all the popular loan types available in the country.
A secured loan is one where you give something as security or collateral to the lender. This could be your Property, gold jewellery, or even your car. If you fail to repay the loan, the lender can take this asset to recover their money.
These loans usually have:
Let’s take a look at the standard secured loans available in India.
A home loan helps you buy, build, or renovate your house. This is the most popular secured loan in India.
The lender gives you a significant amount, which you repay over a long period in EMIs. If you fail to repay, the bank can sell your house.
A car loan helps you buy a vehicle, whether a car, a bike or even a commercial vehicle.
Car loans are easy to get with simple paperwork. Lenders often give loans within 1–2 days of application.
Gold loans are short-term secured loans where you pledge your gold jewellery to borrow money.
This is a quick option for urgent financial needs. If you don’t repay on time, the lender can sell your gold.
A Loan Against Property is when you mortgage your house, shop, or office space to get a large loan.
These loans have long tenures and are suitable for significant needs like funding a startup or sending children abroad.
You don’t always have to sell your investments to raise money. You can pledge your shares, mutual funds, or insurance policies to get a loan.
You can continue to earn dividends or returns even while your assets are pledged.
An unsecured loan does not need any collateral. The bank gives you the money based on your credit score, income, and repayment history.
Because there is no security, lenders charge a higher interest rate. These loans are approved faster, but can be smaller in size.
A personal loan is a multipurpose loan. You can use it for:
No collateral is required. You need a stable job and a good credit score to get approval.
Education loans help students pay for college, both in India and abroad.
You can apply jointly with a parent or guardian as a co-borrower. After completing your studies, you start repaying.
If you already use a credit card, your bank might offer a personal loan up to your card limit.
This should be your last option due to the high cost and is suitable only for extreme emergencies.
Small business owners often need quick money for working capital, equipment purchase, or expansion.
These are quick-disbursal loans that don’t need much documentation. Ideal for small shops and MSMEs.
A Flexi loan is like a credit line. You are given a limit and can use any amount from it anytime.
It offers complete flexibility; you can even reduce your EMI by repaying early.
Before taking any loan, always check the following:
Loans are helpful when used wisely. But remember, you must repay them on time. Always borrow only what you need and can repay comfortably. Avoid taking too many loans at once.
Also, keep your credit score high by paying EMIs regularly. A good credit history can help you get better loan deals in the future.
