Types of loans

Loans are the most important part of the banking industry. The people who have accounts in their respective banks or non-financial institutions, tend to apply for loans. Loans are basically the credit which the banking institutions provide you at a certain rate of interest which is fixed by the banks. The rate of interest includes the MCLR which is decided by RBI. The loans are provided for a certain amount of time which can be for a long period and also short period.

Some loans like Home loan which is provided to people who wish to buy a new home or buy a plot, in that case the interest rate can be fixed or floating. In fixed rate of interest, the interest rate chosen by the customer will be fixed and won’t change throughout the tenure. In floating rate of interest, the interest rate can change or vary throughout the tenure. Some popular loans which people tend to apply form banks are Personal loan, Home Loan, Education Loan, Auto Loan and Credit Card loan. Out of all loans, Personal loan is the most important and the one which is extremely beneficial for the people who apply for it. The term and condition that is associated with the application of personal loan is that the customer should be a salaried employee. Only the salaried people can apply for personal loans. They help you to meet your personal needs and also help you to save money for your future. Next is home loan which actually is applied for a huge amount and long time period. It helps you to buy home and helps you in renovation or construction of the existing plot or house. The rate of interest for home loan is either fixed or floating. Third type of loan is auto loan which is usually applied when you intend to buy automobiles or buy vehicle for you and family. You get attractive interest rates on auto loans. Fourth is education loan which is applied for the teenagers and the ones who plan for higher studies or wish to study abroad. It helps you in making your future bright and fulfil your dreams. Last one is the credit card loan which means a loan amount that is sanctioned by the bank for you if you have a credit card and that particular loan is applicable on the credit card amount. It will apparently help you in paying off high credit card bills and is available to you only if you have a good cibil score and a good history in the use of your credit card.

Loans have become a mandatory option for most of the households. It helps you in fulfilling your needs and also teaches you to spend wisely and exercise a good control over your finance and money.

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