All You Need To Know About Online Loans And Their Types
Loans are available as borrowed funds on which the lender charges interest at a set percentage to cover the risk of lending and charge for the lending time involved. It is extended by various financial institutions, with borrowers spanning across individuals and entities. Broadly said, there are three major components in a loan. They are:
- A principal sum or the total amount borrowed.
- Rate of interest.
- Tenure or the specified period provided to a borrower to repay the loan.
Most lending institutions have now facilitated their loan services online to make funding more accessible to individuals. One can thus access the concerned lender’s website to apply for a suitable type of loan as per his/her financial requirements. Considering the availability of different types of loan online, they can be categorised as under.
- Secured loans.
- Unsecured loans.
Funds which are backed by security or collateral (in the form of an asset, property, jewellery, provident fund, fixed deposit, etc.) are known as secured loans. These loans are also called mortgage loans. On the contrary, unsecured loans are those funds which do not carry collateral. They are disbursed to you on the basis of some lender-specific norms, creditworthiness, eligibility criteria, etc. Borrowers can easily access details about online loans, their types, rates, and features easily by visiting a selected lender’s website.
Loans can also be classified on the basis of tenure. Various types of short-term loans (ranging from 1 to 2 years), mid-term (between 3 and 5 years), and long-term loans (ranging up to 20 years) can be availed online.
Various types of online loans in India
Based on the purpose of borrowing or end-use requirement, there can be different types of loans as well. Here’s a list of the types of online loan that you can avail:
- Home loan
Home or housing loans are secured financing options customised for residential property purchase. It can also financially assist a borrower in constructing a new house property. Housing loans can be further divided into multiple types based on borrower intent, such as:
- Home construction loan.
- Top-up loan.
- Land purchase loan.
A home loan borrower usually has to bear at least 10-20% of the property’s market value when financing such purchase with the advance.
- Loan against property
The type of online loan is available as a mortgage advance. To avail this loan, a borrower can pledge a residential, industrial, or commercial property as collateral. The principal sum disbursed under these loans varies as per the value and condition of the mortgaged property along with other eligibility criteria.
- Personal loan
A personal loan is a collateral-free advance, which means it is a form of unsecured financing. Also, it does not come with any end-use restrictions. Thus, one of the many benefits of personal loan is that a borrower can use it for business, education, personal, medical, or any other funding need. Meeting unplanned expenditures can also be a reason to apply for a personal loan from the best lenders.
One of the popular types of online loans, a personal loan also comes with convenient tenure flexibility, with repayment period ranging up to 60 months.
- Education Loan
These are purpose-specific funds, offered to finance exam fees, admission charges, overseas education, etc. It can also be availed for full-time, part-time, and even vocational courses. While conventional education loans involve lengthy requirements, customised personal loans for higher education come with greater flexibility in terms of accessibility and use.
Options like pre-approved offers on these types of online loan also eliminate the worries of any hassle involved in financing education, among other funding needs.
Provided by Bajaj Finserv, these offers can be availed on several types of financial products, including personal loans and business loans. For a quick look at your pre-approved offers, all you have to do is provide your name and contact details.
While the understanding of what are online loans varies across end-use and other categorisations, selecting the suitable financing option is indispensable to adequate and affordable funding. Further, when looking for easily accessible financing, you can go through the handy guide answering FAQs of a personal loan to understand its use and benefits in terms of instant funding and such other critical aspects.