Finance

Types of Personal Loans You Must Know About

A personal loan is one of the easiest and most simple ways to borrow money for a medical emergency, a large purchase, getting married, consolidating debts, or improving your home, among other things. It is a popular lending choice for several reasons, including the simple application procedure, speedy approval, and minimal documentation. You don’t need to provide any collateral as security to obtain an instant personal loan through an online personal loan app. But many of us are not aware of the variety of personal loans available in India. 

Numerous customized varieties of personal loans have emerged as India’s fintech market develops. With loan apps, you may now receive a personal loan instantly for a variety of purposes. Personal loans vary in nature and procedure depending on the demands of the borrower. To meet the needs of various consumers, the majority of banks and financial institutions offer a variety of personal loans. 

Based on the collateral requirements, a personal loan can be divided into two,

  1. Unsecured loan: In comparison to a secured loan, an unsecured loan is more challenging to obtain. It also frequently entails a higher interest rate because the lending institution assumes a greater risk.
  2. Secured personal loan: Due to the fact that a secured loan is secured by collateral, it has a lower interest rate.

Based on your needs

Due to the very broad range of uses for personal loans, there are numerous sorts of specialized personal loans on the market, including medical loans, shopping loans, travel loans, bike loans, auto loans, and loans for education. Below is a list of a few loans in this category.

Medical loan

You can apply for a medical loan to have access to quick cash if you have a medical emergency but don’t have enough money to cover the associated medical expenditures. The Covid epidemic has strained healthcare infrastructure to its breaking point. Patients with Covid and those suffering from other ailments have both increased. In such circumstances, a medical loan may be useful. In many places, getting a personal loan is frequently done for medical expenses. Personal loans for medical expenses are currently the most popular.

Travel loan

This type of loan is what you should apply for if you’re taking a trip and want to cover your travel expenses without depleting your funds or changing your monthly budget plan. While credit cards might also help you, a travel loan can make the money available quickly and at a reduced interest rate for your travel arrangements.

Home renovation loan

Getting housing loans to purchase land and construct a home is a typical practice. Loans for home improvements can help you pay for labor costs, new material purchases, repair expenditures, etc. With this kind of personal loan, you have the extra benefit of increasing the economic value of your home on the real estate market.

Education loan

Education loans have long been one of the most popular types of personal loans. Typically, parents take out student loans. Then their children take over and repay after completing their further education and landing a job. A personal loan for higher education can pay for all of your costs, including tuition, books, accommodation, transportation, and college fees. 

Bike loan

For the purchase of two-wheelers, loans are available. For this loan, the usual eligibility requirements also apply. With a bike loan, purchasing a bike is simple. You might additionally receive two-wheeler insurance from some businesses.

Consumer durable loan

Banks also provide free EMIs on consumer durable loans. Any consumer durable item, such as a phone, refrigerator, furniture, washing machine, microwave, etc., may be purchased with this form of a loan. The purchase price is broken up into EMIs, which can be paid back over the chosen duration. A down payment or processing fee may be required for some of the products, but not all of them.

Conclusion

As a result, there are numerous varieties of personal loans on the market. Based on variables such as the loan’s purpose, the amount of collateral required, etc., you can simply discover a personal loan type that meets your needs. Depending on your needs, the interest rate and eligibility conditions change.

The industry also provides a variety of instant personal loans. When you take out instant loans using online apps and use them on online platforms, you can also get additional benefits and discounts. Without needing to fill out any additional paperwork, you may quickly obtain personal loans online.

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