Best Loan offers and types in 2021

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Best Loan offers and types in 2021

Best Loan offers and types in 2021 – Secured and Unsecured Loan

We may not always have the money to do certain things or to buy certain things. In such situations, individuals and businesses / firms / institutions choose the option to borrow money from creditors.

When a creditor grants money to an individual or entity with a certain guarantee or on the basis of confidence that the recipient will repay the borrowed money with certain added benefits, such as an interest rate, the process is called a loan or loan.

A loan has three components – the principal or the amount borrowed, the interest rate and holding or the duration for which the loan is used.

Most of us prefer to borrow money from a bank or a trusted non-bank financing company (NBFC) because they are bound by government policies and are trustworthy. The loan is one of the main financial products of any bank or NBFC (Non-Bank Financial Company) offer.

Best Loan offers and types in 2021 | Based on the security offered

Guaranteed loans

These loans require the borrower to guarantee collateral for the borrowed money. If the borrower is unable to repay the loan, the bank reserves the right to use the collateral to recover the outstanding payment. The interest rate for such loans is much lower compared to unsecured loans.

Unsecured loans

Unsecured loans are those that do not require any collateral to repay the loan. The bank analyzes the previous relationship with the borrower, the credit score and other factors to determine whether or not the loan should be granted. The interest rate for such loans may be higher as there is no way to recover the loan amount if the loan is defaulted.

Based on the Purpose
Education loan

Education loans are financing instruments that help the borrower to follow the education. The course can be either a bachelor’s degree, a postgraduate degree or any other diploma / certification course from a reputable institution / university. You must have the admission permit provided by the institution to obtain funding. Funding is available for both domestic and international courses.

Personal loan

Whenever there is a liquidity problem, you can choose a personal loan. The purpose of a personal loan can be anything from repaying an old debt, going on vacation, financing the advance payment of a house / car and medical emergency to purchasing furniture or gadgets with big tickets. Personal loans are offered based on the applicant’s previous relationship with the creditor and the credit score.

Vehicle loan

Vehicle loans finance the purchase of two- and four-wheeled vehicles. In addition, the four-wheeled vehicle can be a new or a used one. Based on the road price of the vehicle, the value of the loan will be determined by the lender. You may need to prepare in advance to get the vehicle, as the loan rarely provides 100% financing. The vehicle will be owned by the creditor until full repayment.

Home loan

Home loans are dedicated to receiving funds for the purchase of a house / apartment, the construction of a house, the renovation / repair of an existing house or the purchase of land for the construction of a house / apartment. In this case, the property will be owned by the creditor and the property will be transferred to the rightful owner upon completion of the repayments.

Based on pledged assets
Gold loan

Many lenders and lenders offer cash when the borrower commits to physical gold, whether it is jewelry or gold bars / coins. The lender weighs the gold and calculates the amount offered based on several purity checks and other things. The money can be used for any purpose.

The loan must be repaid in monthly installments so that the loan can be repaid by the end of the term and the gold can be returned to custody by the borrower. If the borrower fails to make the repayments on time, the lender reserves the right to take over the gold to recover the losses.

Loan against assets

Similar to gold pledges, individuals and companies pledge property, insurance policies, FD certificates, mutual funds, shares, bonds and other assets to borrow money. Based on the value of the pledged assets, the lender will offer a loan with a certain margin at hand.

The borrower must make timely repayments so that he can obtain custody of the assets pledged at the end of the term. Otherwise, the lender may sell the assets to recover the unpaid money.

Important Factors Lenders review to approve your application | Credit score

The credit score plays an important role in deciding whether the lender would like to proceed with your application or drop it at the initial stage. This is especially true when it comes to unsecured loans.

As a credit score represents the borrower’s credit history, the lender analyzes the borrower’s repayment history and concludes whether the borrower can repay on time or will pay unpaid. The approval of the loan is based on the judgment of the lender after the necessary analysis.

History of income and employment

Monthly or annual income and employment history also play a crucial role in approving the loan. Based on income and income stability, in the form of a consistent and stable work history, the lender may or may not be convinced that you will be able to repay the loan.

Even if you are independent, the lender assumes that your business has been doing well in recent years, and your company’s turnover is satisfactory.

Debt-to-income ratio

Not only do you have a good income, your debt-to-income ratio is also important. If you have an income of Rs.1 lakh per month and if your debt repayment commitments already exceed Rs.

Therefore, regardless of income, you need to have a low debt-to-income ratio so that lenders can believe that you have enough money to make repayments each month, as well as manage family expenses.

Collateral

Based on the collateral you provide and its current market value, the lender can decide the interest rate applicable to your loan. Providing collateral will make the transaction more secure from the lender’s perspective, which can lead to more confidence and an interest rate. smaller. An unsecured loan is infamous because it includes a comparatively higher interest rate.

Advance (Down payments)

The money you have saved and the effective execution of your savings plan toward an advance payment will increase your creditor’s confidence. The higher the advance, the lower the loan value requirement.

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