In a country like India, most of the people belong to middle class family. Whether to build a house, to study, to take a car, it is not so easy for a middle class family to do all this with their own money. In such a situation, to complete all these works, money has to be borrowed from the bank.
Which he later repays every month according to his earnings and ends the loan taken for himself by paying some extra money. If there is more than one child, then the parents have to make a lot of effort for the good education of each child. This is the reason why loans help such people in this matter.
There are many such needs which are not possible for a common man and are fulfilled by the loan from the bank, but do you know how many types of loans are there (types of loan).
What Is Loan?
When a company or person takes a loan from a bank or private finance agency to meet any of his personal needs, which he has to repay with some interest to the lender within the stipulated time frame. If so, we call it a loan or loan . By the way, there are many types of loans available for different works, such as if someone wants to build a house, then he should take a home loan and if a person needs a loan to fulfill his personal needs, then Personal Loan for Him Is. Similarly, if a person takes a loan for the higher education of his child, then this type of loan is called Education Loan.
Bank Loan Types
- Home loan
- Property loan
- Insurance policy loan
- Gold loan
- Mutual fund and share loan
- Fixed deposit loan
- Personal loan
- Business loan
- Flexi loans
- Education loan
- Vehicle loan (vehicle loan)
Benefits of Loan
Let us know about the features and benefits of loans.
- Having Financial Flexibility: Loans provide you financial flexibility. It provides you financial help in your time of need. On the other hand, by taking a loan, it also provides you some degree of financial freedom and also handles your everyday expenses properly, while not moving your planned budget here and there.
- Easy availability : All types of loans are mostly approved within 48 hours, provided you have already submitted all the required documents. So they can be easily obtained.
- Receiving the amount needed: On the basis of your income and financial history, you get the money you need.
- Having a Convenient Tenure: While taking the loans, you can choose the time frame within which you can repay the loan. Most of the time, you get loans from 12 months to 60 months.
- Benefit in Tax Benefits: According to the Income Tax Act of 1961, you get the facility of tax benefits in almost all types of loans.
What are the things to keep in mind before applying for a loan?
Taking a loan is an easy thing, but before that you must pay attention to some things because for this you may have to repent later. Let us focus on some such aspects.
Credit score: Before applying the loan, you must check your credit history once. This credit history is a type of record which shows the investment made by you, the loans taken and the repayment record already. This will show any bank that how is your previous track record and whether you should really give loan or not. By the way, a good credit score of 750 or above is considered.
Rate of Interest: Make sure to check the loan interest rate once before applying for the loan. Because loans that require a collateral have lower interest rates than loans that do not require them.
Processing fee and other charges: If you apply for a loan and you miss your loan payment deadlines, then you have to pay a processing and penalty fee. These fees and charges depend on the loan amount and bank.
Do research to get the best rate of your loan: Research and compare with different banks; From NBFCs so that you can know about the best interest rates, EMI, tenure and other charges.
Types of Loans According to Taking Them
1. Open-ended loans
These are called loans that you can take again and again. Credit cards and lines of credit are the most common types of open-ended loans. In both these types of loans, you have a credit limit against which you can purchase.
Every time you make a purchase, there is a reduction in your available credit. This is because the credit limit is fixed. At the same time, as you make payments, then your credit limit also increases so that you can take the same credit again and again.
2. Closed-ended loans
These are called those loans which if you take it once, then you are able to take it again only after you have paid it. Here too, as you keep repaying the loan amount, your loan balance also increases, but you cannot take any more loans in this. Rather, you can take the loan again only after paying the full loan amount.
If we talk about the example of closed-ended loans, then it includes mortgage loans, auto loans, and student or education loans.
What are the main reasons for taking a loan?
Let us now know what are the main reasons for taking loans.
- To Fulfill Life Goals: When you want your life goals to be fulfilled and for this you need a little financial assistance, then you need a lot of loans.
- Having Immediate Financial Requirement : We do not even know when what will happen to someone, so at such a time you can apply for a loan if there is a financial emergency.
- To do any financial arrangement properly: If some such incident happens in front of you about which you do not know anything, then you can apply loan at such time, because you do not want If there is any kind of obstruction, then things should go smoothly.
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