Secured Loan
Home Loan
A Home Loan is a secured loan product where the lender provides finances for the purchase or construction of a residential/commercial property. One can also avail a housing loan to buy a plot of land and construct on it. Home Loans are also issued to extend/ repair/ renovate/ alter a new or second-hand property. The Home Loan is taken by a borrower against the property/security to be bought. This is done by giving the banker a conditional ownership over the property i.e. if the borrower fails to pay back the loan, the banker can retrieve the lent money by selling the property. Most lenders get the property valued independently and provide loans based on their estimated value. It is important to remember, however, that frequently their valuation is significantly lower than the actual cost and hence the requirement of the borrowers goes up. Home loans in Indian Banks are provided up to maximum of 80% (90% for loan amount below INR 20 lakhs) of the value of the house. Home loans are repaid using Equated Monthly Installments (EMIs) spread over a fixed tenure.
Education Loan
Quality education is of prime importance to any individual, and students go the extra mile to achieve that. However, the cost of education is on the rise lately and opting for an education loan seems to be the single best solution. An education loan is a loan that students apply to meet the financial requirements to complete their course. Many banks and NBFCs in India offer education loans at competitive rates to help educate the upcoming innovators and leaders. When you start repaying the education loan, the interest segment you pay towards the loan every month can be used to claim income tax deduction under Section 80E. However, the deduction cannot be claimed on the principal repayments. Also, there is no limit on the amount you can claim for interest repayment on an education loan. As proof of this, you need to obtain a certificate from the bank. The facility is available only for eight years from the year you start repaying the loan or until the interest is fully repaid, whichever comes first.
Gold Loan
The gold loan, also referred as a loan against gold, is a secured loan that a borrower takes from a lender in lieu of gold ornaments such as gold jewelry. The loan amount sanctioned to you by lenders is generally a certain percentage of the gold’s value. You can repay it through monthly installment after which you get your gold articles back. Unlike other secured loans such as a home loan or car loan, there are no restrictions on the end use of gold loans. So whether you need to fund a wedding, family vacation or your child’s education, it is a great way to meet your sudden money requirement. Moreover, a lot of private and nationalised banks along with NBFCs offer gold loans at affordable interest rates. Gold loan is a secured loan; therefore, its interest rate is low in comparison to unsecured loans such as a personal loan. Therefore, if you are planning to apply for the gold loan, do not accept the first offer you get. Compare gold loan offers from at least two to three lending institutions and then make your choice.
Loan Against Property
A loan against property (LAP) is a secured loan that banks, housing finance companies and NBFCs provide against residential or commercial property. These loans are usually offered at a lower interest rate as compared to a personal loan or business loan and are disbursed at a reasonable time. A loan against property is a boon for both business owners and salaried employees. Self-employed who are seeking funds for expansion of their business can make use of this facility. Salaried professionals facing a sudden medical crisis that may require long-term treatment, including expensive surgery, or sending children to a foreign university for higher studies can avail the facility for raising funds. A LAP not only leaves one’s savings intact, but it also comes at low-cost EMIs with repayment tenures of as long as 15 to 20 years. The low-interest rates on such loans dilute the repayment burden. All these and other benefits help in the growth of the business or safeguard the financial future of both the loan applicant as well as his or her family. The only criterion for availing of a loan against property is that the loan should be for a legitimate purpose.
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