What is a loan? How many types of loans are there.

Hello friends, how are you? I hope you are fine. Friends, sometimes we need a lot of money to do any work or start a new business. And when we do not have money, we think of talking about a loan. In this article, we will know all about the loan

What is a loan?

  • what this loan is, 
  • how many types of loans are there, 
  • And how many types of loans are provided by the banks or financial institutions. To know all this information, definitely read this article till the end.

What is a loan?

Friends, to buy anything or do some critical work or increase business or do any personal work. The financial help or money taken from the bank or any financial institution is called a loan. In return, the customer bank or the finance company has to pay back the entire loan amount and interest in EMI. We call all these processes taking a loan.

How many types of loans?

Friends, loans are some different types in different countries. But most of the loans are of 8 types. And all the banks and financial institutions provide all types of loans given below.

There are three types of loans according to the period.

  1. Short-term loan: In which the repayment time is less than one year.
  2. Medium-term loan: In which the repayment time is between 1 to 3 years.
  3. Long-term loan: In which the repayment time is more than three years.

1. Personal loan

a loan taken for self. However, everyone takes a loan for himself. Still, a personal loan means to take a loan for his work such as: - To pay school fees of children, someone's treatment Whether to get it done, to give an expensive gift to someone, or to take household items. Each bank has its rate of interest for a personal loan. And it is also essential to know that the interest rate of personal loans is higher than other loans. Banks do not ask for many documents while giving you a personal loan; look at your salary and issue the loan. You can get a personal loan for up to 5 years.

2. Gold loan

The process of taking cash instead of keeping gold in the bank is called a gold loan. In this, you have to keep the gold in the bank's locker, and then you get the loan. You get this type of loan on the quality and price of the goal you have deposited. By the way, it has been seen that banks give you loans up to 80% of the value of gold. People usually take gold loans to meet their needs in case of emergency. The interest rate charged in the gold loan is much lower as compared to a personal loan.

3. Loan against security

In this, the bank gives the loan by keeping your security paper. But the question arises that what are these security papers? If you have already invested in your Diamond Share, Mutual Fund, Insurance scheme, this is your security paper. In return, the bank gives you a loan. These papers have value. Suppose you are unable to repay the loan, i.e., incapable. In that case, the bank collects your security paper and sells it in the market. By the way, you can also mortgage these security papers in the bank; in return, the bank gives you the facility of overdraft based on these papers. Overdraft means getting the facility to withdraw more money than what is in your account. Even if you have zero balance in your account, you can still withdraw money from your account. This is called overdraft.

4. Property loan

In this, the bank mortgages the property papers and then gives the loan. If you want to take a property loan, you have to mortgage any of your property papers with the bank; in return, the bank gives a loan according to the value of your property. Usually, the loan is available from 40% to 60% of the value of the property. And it can be available for a maximum of 15 years.

5. Home loan

The loan taken for buying a house is called a home loan. You do not take a loan only for the construction of the house, but you can take a loan from the bank by adding the cost of building the house, registration of the house, stamp duty, etc. The bank can give loans from 75% to 85% of the total amount of your expenditure; you have to collect the other money yourself to build a house. Suppose you have taken a loan for a plot whose value is six lakhs, then you will give only 30% of 600000, i.e., 180000 rupees, to the bank, and you will keep paying the rest gradually. The period for repayment of a home loan can range from 5 years to 20 years. In addition to the interest, the terms of the home loan also include specific fees. Such as - Processing fees, administrative charges, legal fees, assessment fees, etc.

6. Corporate loan

When the bank provides loans to big players like- Narendra Modi, Vijay Mallya, Ambani, Tata Birla, it is a corporate loan. According to the current rules, banks can give loans up to 25% of their core capital to anyone big company.

7. Car Loan

Banks often offer various schemes in the form of loans to buy a car. Like other loans, these loans are given at fixed or floating rates for different periods. Fixed-rate means fixed interest rate. When you take a loan, then the interest rate that is applicable at that time, the same interest rate remains applicable until the entire loan is repaid. The floating rate is the interest rate that can change over time, and it can be more or less. And accordingly, the interest rate of your loan also keeps on increasing or decreasing. Before giving you a loan, the bank asks whether you want to take a loan at a fixed rate or take a loan at a floating rate. In a car loan, until the loan is fully repaid, the ownership rights of the car rest with the lending bank. To take a car loan, you may have to submit your salary slip and income tax return slip for the last 2 or 3 years in the bank. Apart from this, you also have to submit some ID proof and address proof. The interest rate for new cars and the interest rate for old taxes are different.

8. Education Loan

Merit does not come in the luck of every student, who can study in the institute per their wish. If someone wants to study at Oxford University, then he may face money problems. There are so many fees that even thinking of going there to study is a complicated task. In such a situation, a student can apply for an education loan from the bank. The bank ensures the repayment of the education loan before giving it. It has been observed that loans are given only to those students who have the ability to repay them. Banks check the ability of students in two ways. First - the income of his parents is seen; second - the student taking the loan will be able to work or will not be able to work after studying from which university he is going to. The bank approves the loan only after seeing what the ratio of campus selection there is. After the completion of studies, the student can make the repayment. A grantor is also required to take an education loan. The guarantee can be the parents or even relatives of the borrower.

Friends, I hope you liked this post. And what is this loan, and what are the types of loans. You will get all the information about all these. If this post is helpful to you, then do share it with your friends and family. Thank you!

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