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Types of Bank Loans
Personal Loan
Personal loans are unsecured loans used for personal expenses or consolidating debt. They don’t require collateral and interest rates are usually lower than credit cards. Repayment periods last 12 to 72 months and fixed monthly installments are made. This type of loan can be used for several purposes including home repairs, medical expenses, weddings and travel. However, borrowing money through a personal loan should be done responsibly to avoid debt.
Business Loan
A business loan allows a company to borrow money for growth and expansion. Loans can be secured or unsecured, and may require collateral. Banks, credit unions, and alternative lenders offer business loans. Interest rates depend on the type of loan. Government-backed programs also exist for small businesses.
Home Loan
A home loan helps buy or renovate a home with fixed or variable rates, secured or unsecured loans, and government-backed or private lender loans. The application process requires financial information and property details, while lenders check credit scores, income, debt-to-income ratio, and appraisal value. Approved borrowers repay the loan in instalments over years. Home loans assist people to buy their dream home, but it’s important to evaluate the financial impact of taking on substantial debt.
Loan Against Property
Loan Against Property (LAP) is a secured loan using property as collateral. Amounts offered are higher than unsecured loans, ranging from Rs 5 lakh to Rs 25 crores and can be used for various purposes. Repayment periods range from 5 to 15 years with lower interest rates than unsecured loans. Failure to repay can result in loss of pledged property. Evaluate financial position before opting for a loan against property.
