All you need to know about different types of loans you can get

Different types of loans help you cover varied expenses by bridging financial gaps. Lenders, such as banks and NBFCs, offer loans based on your usage, eligibility and their internal policies. 

You pay interest to enjoy the facility to borrow, so shopping for affordable rates should be your priority when you are looking to borrow. Planning repayment is also key, as not repaying on time can affect your creditworthiness adversely. 

What is a loan and what types of loan options are available in the market?

A loan is a financial product that provides you with funds. It comes with certain terms, where you, as the borrower, promise to repay it with interest over a specified duration of time. 

There are many types of loans that you can get today and they can be classified into two main categories: 

• Secured loans require you to pledge an asset as collateral to get access to credit
• Unsecured loans do not require any security but may have stricter eligibility terms and high-interest charges 

Apart from these, you may come across other loans such as:

• Lines of credit
• Flexi loans
• Loans with fixed or variable interest

These classifications are based on how the amount is disbursed to you as well as the way in which you repay. 

In addition, loans are named based on usage, such as wedding loans or home renovation loans. They may also be named based on the borrower’s profile, such as salary advance loans for salaried professionals. 

Examples of Secured Loans

Now that you have understood how many types of loans there are, here are some examples of popular types of loans that require collateral. 

Home Loans

Home loans are a type of secured loan that provides funds to buy a property or build a house and lenders consider the home you buy or construct as collateral. When you take a home loan, you can get up to 90% of the property’s value as the loan amount. 

Loan Against Property

As its name suggests, you can access funds by pledging your property as collateral. With this loan, you can get a loan amount up to 65% to 85% of the property’s market value. 

Loan Against Mutual Funds/Fixed Deposits 

Such loans allow you to pledge your mutual funds or FD as collateral and get funds for your requirements. Typically, you can get around 50%-60% of the value of MF units as a loan amount or up to 90% of your FD. 

Gold Loans 

You can also leverage your gold jewellery, coins, or digital gold to get a loan. The LTV ratio of this loan generally ranges between 75% and 90%, which means you can get up to 90% of the metal’s market value as the loan amount.

Car loans, bike loans and loans against insurance policies are other examples of secured loans you can get. 

Also Check: Instant Cash Loan

Examples of Unsecured Loans

Here is a look at various types of unsecured loans you can get. They do not require you to risk your assets and may be faster to get as well. 

Personal Loans

These are the most popular lending options that allow you to enjoy instant liquidity. They come with no use-case restrictions, which means you can use the funds freely. Most applicants use these loans to address emergencies and big-ticket expenses. 

 Based on the use case, there are several types of personal loans, including:

• Vehicle loans
• Education loans
• Travel loans
• Medical loans
• Debt consolidation loans
• Home renovation loans
• Consumer durable loans 

Short-Term Business Loans

Entrepreneurs can make the best use of these unsecured loans to set up their business or expand it. Some types of short-term business loans include the following:

• Equipment and machinery loan
• Working capital loan
• MSME loan
• Loan for women entrepreneurs

With this guide, you can take the next step towards bridging financial gaps with ease. Remember to choose a lender who is 100% transparent, has no hidden charges and offers repayment flexibility and easy access via online processes. Get all these advantages and more on Fibe, where you can access a variety of Instant Personal Loans of up to ₹5 lakhs. 

Download the Instant Cash Loan App or log in to our website to get started with a simple and quick digital application. 

FAQs on Different Types of Loans 

What are the four classifications of loans?

The four different types of loans that most lenders offer in India include secured, unsecured, fixed-interest and variable-interest loans. 

What is the most common type of loan?

The most common type of loan you can get access to is a personal loan. 

Which loan is popular in India?

Some of the popular lending options in India include personal, home and gold loans.

Which loan has a high-interest rate?

An unsecured or collateral-free loan generally comes with a higher interest rate as compared to a secured loan.