5 Different Types of Loans in India With Low Interest Rates

In today’s day and age, loans can be used for many different purposes. It can be used for everything from financing a start-up to purchasing furnishings for a new home. In simple terms, loan can be defined as a debt that a person or an organisation incurs. A lender is the other party to the transaction; typically, it is a government agency, financial institution, or business. They lend the borrower the necessary amount of money. In exchange, the borrowers consent to pay a specific set of conditions, such as any finance fees, interest, etc., using the money they initially borrowed.

In this article we will discuss about five different types of major loans India and highlight their low interest rates.

1. Personal Loan

Borrowers can get personal loans from the majority of banks, and they can use the funds for everything from paying bills to getting a new television. These loans are typically unsecured loans. Before authorising the personal loan amount, the lender or the bank requires specific documents like evidence of assets, proof of income, etc. The borrower must possess sufficient resources or income to pay back the loan. When you want to borrow a small amount and pay it back as quickly as you can, personal loans can be a big help.

Interest rate : These loans may have somewhat higher than average interest rates. These loans have a short term of borrowing. Therefore, if you borrow a large sum, it may be difficult for you to repay it if your finances are not properly planned.

2. Home Loan

Applying for a home loan can be very beneficial when you want to buy a house. It offers you financial assistance and allows you to purchase your dream home for yourself and your family. These loans typically have longer terms that can ideally be decades long. Most people who take out home loans do so to purchase new homes. But you can also use these loans to buy land, build houses that are still under construction, renovate your house, add on to your house, etc.

Interest rate : A few of India’s leading banks provide home loans with rates that begin at 8.30%. First before lender approves your loan request, your credit score is inspected. There is a decent probability that you may qualify for cheaper interest rates on your home loan if you have an excellent credit score.

3. Gold Loan

A gold loan can be used to raise money for unforeseen or planned expenses like business growth, education, urgent medical care, agricultural costs, etc. A loan against gold is a secured loan in which gold is used as security or collateral in exchange for an amount of money that is equal to the market value of gold per gram on the day that the gold is pledged.

Interest rate : Indian Bank (7.00%), Central Bank of India (7.10% to 7.20%), HDFC Bank (7.60% to 16.81%), Union Bank (7.25% to 7.50%).

4. Consumer Durable Loans

Consumer durable loans are available to help pay for the purchase of durable goods like electronics and home appliances. They can be used to purchase anything, ranging from mobile phones to televisions, depending on the lender. The range of loans is from Rs. 5,000 to Rs. 5 lakh.

Interest rate : Typically, no security deposit is needed. Some lenders provide consumer durable loans with instant approvals, 0% interest rates, and little to no documentation.

5. Car Loan

Buying an automobile can surely provide you a great deal of enjoyment and fulfilment. A automobile will be one of your biggest assets and will always be valuable. To close the gap between intending to buy a car and actually doing it, you can get a car loan. It is advantageous to have a high credit score when you request for a car loan because credit reports are important for determining your eligibility for any loan. It won’t take long for the loan application to be granted, and the interest rate may even be reduced.

Interest Rates : Axis Bank (8.50% – 11.25%), Bank of Baroda (7.35% – 9.10%), Central Bank of India (7.25% – 7.50%), HDFC Bank (8.80% – 10.00%), ICICI Bank (8.82% – 12.75%), SBI (7.95% – 8.70%), PNB (9.40% – 9.90%), Union Bank of India (7.40% – 7.50%)