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Different Loan Options to apply for your money need
Posted on: 23/May/2018 1:19:37 PM
The need determines the type of borrowing method one has to choose for meeting the ends of the requirement. Emergency financial expenses, Personal need, Home and Vehicle purchases are some the major categories in which people select their loans with their respective banks.
Customers should have enough knowledge to choose the right kind of loan depending on their current requirements. Here we list out some of the most popular loan options for the clarity of the customers availing it:
1. Personal Loans
For emergency money needs and to meet the requirement of any personal expenditures the better option to go for is personal loans. Personal loans do not have any kind of restrictions and banks will not ask for any kind of security for disbursing it.
As the documentations of personal loans are very minimal the formalities are far quicker than any other loan options. One of the important concern is that there is a considerable limit for personal loans depending on the precious transactions in the bank account and regular payments of EMI and earlier loans add on to the limit criteria for receiving personal loans.
Interest rates in personal loans range from 10.65 to 24 percent per annum for a tenure of 1 to 5 years in most of the cases. Prepayment is also allowed for such personal loans but extra charges up to 5 percent of the total principal outstanding amount will be collected for such prepayment operations.
2. Loan against Credit card
Loans on credit cards are provided with the fixed amount of a particular customer’s credit card limit and transactions. Customers with good credit history by regular repayments of earlier loans are preferred most of the times to customers who do not have any credit history with their cards. The credit card loan option involves zero documentation and will be approved soon after the application.
The interest rate charged for this type of loans are approximately 1 to 2.5 percent higher than other type of loans. The quick approval and less verification for the loan are the primary reasons for the increased interest rate in credit card loans.
3. Top-up Existing Home Loans
Customers who are already in the repayment zone of the home loan can apply for a top-up loan. The banks can provide you the top-up based on the regular payments of the interest amount of the home loan acquired earlier. There is no usage terms for this kind of top up loans. One can use the top up home loans for any expenses like Children education, Wedding expenses, Business expansion, Home Renovation and so on.
The interest rate for top up loans are usually slightly higher than the normal interest rates but many banks offer this kind of loan options with 8.3 percent of interest per annum.
The loan acquired from the top up options are added to the outstanding tenure of the home loan and then the repayment can be done with the outstanding amount.
4. Gold Loan
Gold loans are sanctioned very soon, as the entire banking operations of such exchange loans depend on a special property. The interest rate for such loans comes around 9.24 percent and most of the times the money disburursal happens within a day of applying the loan.
Gold loans are mostly provided with a short tenure of 3 years maximum. The only concern is the failure in repayment or interest payment can have a negative effect of lender using the collateral to recover the dues.
5. Loan against Securities
Security loans are the most common type of loan options availed by customers all over India. In rural segment where one doesn’t have any smart avail loan options or credit cards the only way to apply for a loan is by providing securities.
Mutual Funds, Insurances, Provident funds, Demat shares, Listed Bonds, Housing and property documents are the types of securities used for obtaining larger amounts of loan from lenders. The verification of the documents and the submission of approved securities and figures are primary needs for the approval of the loans.
