An Inclusive Guide About Different Types Of Loans
If ever you have wanted to make a big purchase, start a business, or study abroad, but could not fulfill these dreams because of the financial crunch, then loans are what you need. Be it your academic requirement or buying your dream house, loans are available to meet immediate liquidity requirements. Let us look at the different types of loans that are available for your convenience.
Types Of Loans
It is not possible for every person to have a bag full of cash on an immediate basis. It gets difficult to arrange money for immediate requirements at short notice. So to ease the burden, loans are available for convenience. Borrowing money all at once and repaying in installments is way easier and more convenient.
1. Home Loan
One of the biggest investments that a person makes is purchasing a house. It requires plenty of assets at disposal. It might not be feasible for everyone to arrange such a large amount on short notice, for which home loans provide a solution. A home loan can help with financial assistance for the purpose of construction, renovation and purchase of a house with easy and manageable installments. The house itself is kept as collateral in exchange for the loan amount because the loan amount is enormous.
2. Personal Loan
Many times, money is required for personal purposes as well. It may relate to luxury purchases, vacations, or even to cover wedding expenses. These types of loans are generally given without collateral and do not require a tedious documentation process. The eligibility requirements are not very strict as well. It requires the person to be enrolled in a job and should have a decent CIBIL score. The requirement of minimum monthly income is also not excessive.
3. Education Loan
Pursuing higher education can be high-priced. It sometimes gets difficult for students and parents to afford such exorbitant academic expenses, but this does not mean that their needs can not be met. Education loans come in handy in such situations. Education loans can be availed for domestic as well as overseas education. The loan amount can be availed against different collaterals like property, other security, or even on a third-party guarantee.
4. Small Business Loan
To set up a business, a lot of resources are required. Business loans like SBA Loan Maryland are available in the market to provide a suitable and affordable business loan at fair interest rates. To apply for a small business loan, some eligibility criterias are supposed to be met, like, a good credit score, a solid business plan, and a report of the business projections, etc. Every bank has some special requirements, different interest rate structures, starting from 11%, and different repayment structures as well.
5. Vehicle Loan
From purchasing a two-wheeler to a car, the need for liquidy is essential. Both the cost and the need for vehicles are increasing as well. So to meet liquidity needs, banks and other financial institutions offer loans specifically for this purpose. In these loans, the vehicle is used as collateral itself. A good credit score is not necessarily a pre-requisite to avail of a vehicle loan since they are secured against the vehicle itself, which also leads to lower interest rates.
6. Gold Loan
Gold itself is a great asset in itself, but owning it can sometimes be an unproductive asset. As one of the best assets, gold cannot directly be traded in the market in exchange for goods, but it can definitely be used as a security to obtain liquidity for urgent needs. To get a gold loan, a good credit score is important. The gold is checked for its purity and with minimal documentation process, the loan can be approved. A good part about this loan is that the person does not have to specify the end use of the loan amount.
7. Agriculture Loan
Being involved in the agricultural business can be financially very extorting. From the requirement of the right fertilizers for the land to proper storage of crops, an exorbitant amount of money can be required for the process. So to meet these financial requirements of people involved in agriculture, agricultural loans are available for disposal. The process of a loan is simple and easy and the interest rates are also set at low levels.
Final Word:
The requirement for money is different for every individual, and so is the process and type of loan. It is important to clearly understand the purpose and then decide what type of loan will best suit your needs.