Introduction

  • A Loan is an act of borrowing money, property or any other material goods in exchange for future payment with interest or charges. It can be for a specific amount or can be available for a specific time limit and ceiling limit.

  • Financing solutions are critical, as wealthy owners may require external financing in various situations of either protecting or enhancing their wealth. At times, the need may be to create liquidity to meet personal or business commitments. This can be done by raising finance against existing strategic assets instead of selling them.

  • Currently, in India, we have different types of loans available ranging from personal loans to marriage loans. But when to use which loan is a smart way of managing your money.

Home Loan

  • Home loan as the name suggests is the loan against buying property. Every individual currently has a dream to have their own home. The best option to make this affordable is a well-planned home loan.

  • Following are the sub-categories of home loans:

  • 1. Home loan for residents

  • 2. Loans for repairs and extension

  • 3. Land purchase loan

  • 4. Top-up loans

  • 5. Loan for Earnest Money Deposits (EMD)

  • 6. Reverse Mortgage Loans

Commercial Loan

A commercial loan is a debt-based funding arrangement between a business and a financial institution, typically used to fund major capital expenditures and cover operational costs that the company may otherwise be unable to afford. Commercial loans are granted to a variety of business entities, usually to assist with short-term funding needs for operational costs or for the purchase of equipment to facilitate the operating process. In some instances, the loan may be extended to help the business meet more basic operational needs, such as funding for payroll or to purchase smaller supplies that are used in the production and manufacturing process. SME Loans, CC Limits, Trade Finance & ECB are some of the types of business loans.

Lease Rental Discounting

  • A property owner who receives fixed rent from tenants can get a loan from any financial institution against their owned premises, which is called the Lease Rental Discounting. The lease rental discounting is between the owner of the premises, the tenant who has rented the premises and the bank or financial institute. The major type of repayment is the rent which is directly deposited with the bank or financial institute and not with the owner.

  • This loan against rental discounting differs from other loan products in two ways:

  • 1. The loan agreement is made between the lending institution, the lesser and the lessee.

  • 2. The rent is not collected by the lesser but is credited every month to the lending institution.

Loans

  • 1. Loan Against Property

  • The loan can be availed against your existing residential, commercial property or a vacant piece of land. It is a great way to get a loan at low-interest rates to meet your current financial needs without actually selling off the same.

  • 2. Educational Loan

  • Education loan is an amount borrowed from the financial institutions or bank for the purpose of financing the education school-related expenses. In some cases, the repayment is done during the period of education or it can also be repaid at the end of the six month grace period after graduation.

  • 3. Personal Loan

  • If you need cash to fund a major purchase or any expenditure like an expensive electric gadgets, booking air tickets or home furniture, then getting a personal loan is one of the best options.

  • A personal loan is a good financial move if you want to consolidate high-interest debts or want to purchase expensive items.

  • 4. Loan against Shares, Mutual Funds & Bonds

  • This loan offers you an opportunity to use the power of your investments and raise the capital for your personal or business financial needs without actually having to sell the investments.

  • This enables you to borrow funds against your listed securities such as shares, mutual funds, insurance and bonds. You can go for this option when you have an immediate need for liquidity and sure to repay in some time.

  • 5. Car Loan or Vehicle Loan

  • This is usually used to meet your financial requirement when one is planning to have his dream car or bike. It is usually a secured loan where collateral is your vehicle and in case of default, the lender may recover it by taking back your vehicle. But some lenders offer unsecured loans where your credit score matters more.

  • 6. Gold Loan

  • Gold loan is sanctioned by accepting the gold ornaments of the customer as a pledge. It is true that Gold loans, like personal loans or credit card borrowings, are often used for short-term household requirements. However, in terms of the cost and ease of availing the loan, and the convenience when repaying, gold loans are a better bargain. Gold loans are cheaper and can be availed of in minutes. You can also stretch the repayment to your convenience

  • 7. Loan against Bank FDs

  • This is one form of loan where your collateral is your bank FD itself. Suppose you have bank FD of around Rs.10,00,000 then you are usually eligible to get a loan up to Rs.8,00,000. But interest rate will be 1-2% higher than your FD rate. But still this form of loan fastest and the best way.

  • 8. Loan against Insurance Policies

  • You can use your insurance investment as either collateral or take a loan from insurer itself if that policy is eligible for a loan. Usually, loans will be available after 3 years of the policy period. You will get loan easily on your policy from an insurer. But another method to take a loan is to pledge your policy document with banks and take a loan on that.

  • 9. Loan from unrecognized sector

  • This is one of the easiest but costliest ways of fulfilling your financial dream. Usually, the interest rate will be in the range of 20% – 30% but you can manage it immediately. Such type of loans is useful to those who are running out of time and lacking proper source to fund their financial requirements. But looking at this option is a costly affair. Hence, it is highly advisable to avoid such funding.

  • 10. Loan from PPF or EPF

  • You can avail loan from PPF when one satisfies certain conditions. You can avail loan from EPF too. But you can avail loan from EPF only for special purposes like purchase of plot, medical treatment, education or marriage of children, construction or purchase of a house, re-payment of home loan, and renovation of home or pre-retirement. But all are not eligible to take loans. There are certain conditions like minimum years of completion, age or proof needs to be produced. So, it seems a bit lengthy procedure.

  • You can become our partner for excellent loan services. Thelegalank is working in Jaipur, Dehli, Mumbai, Bangaluru, India, France, Asia Pacific and all over the world.

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