In today’s diverse financial landscape, various types of loans cater to individuals in need of quick financial assistance.
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These loans vary in terms of interest rates, collateral requirements, and the ease of availability.
Let’s explore seven such loans that provide swift financial solutions.
1) Personal Loan:
Personal loans, characterized by an interest rate ranging from 10% to 29%, do not require any surety or collateral. The loan amount is determined based on the borrower’s credit profile, offering flexibility in availing any desired amount. While the absence of collateral safeguards the borrower’s assets, the relatively higher interest rates reflect this unsecured nature. Despite this, personal loans are easily accessible, making them a convenient option.
2) Car Loan:
Car loans, secured by the customer’s vehicle, typically carry interest rates between 10% and 22%. The loan amount can range from 50 to 200 percent of the car’s value, contingent on the popularity and resale value of the vehicle. However, discontinued car models may not qualify for this type of loan. Car loans strike a balance between accessibility and security, utilizing the vehicle as collateral.
3) Loan Against Mutual Fund/Shares:
This type of loan, linked to mutual funds or shares, features an interest rate 50 to 200 basis points higher than FD deposits. Collateral is in the form of a fixed deposit (FD) with the bank, and loan amounts can range from 70 to 95 percent of the FD value.
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The advantages include minimal documentation, no credit history check, and faster availability. However, loans against FDs for minors or joint accounts require special permissions, and defaulting on the loan may lead to FD account closure.
4) Loan Against Insurance Policy:
Interest rates for loans against insurance policies are determined by the premium amount paid. The loan is secured by a life insurance policy, offering 85 to 90 percent of the surrender value as the loan amount. While banks and insurance companies extend loans against policies, eligibility varies, and exceeding the policy value with the loan amount plus interest can render the policy void.
5) Property Loan:
With interest rates ranging from 8.50% to 18.00%, property loans require tangible assets as collateral. These loans allow borrowers to access 60 to 70 percent of the property’s value. Although the application process is similar to home loans, property loans boast quicker availability. Early repayment may incur penalties.
6) Gold Loan:
Gold loans, secured by gold as collateral, come with interest rates varying from 8 to 24 percent. The loan amount is proportionate to the value of the gold, allowing borrowers to receive 65% to 75% of the market value.
The advantages include quick sanctioning with minimal documentation. However, failure to repay within the stipulated time may result in the financial institution selling the gold.
7) Loan Against FD:
Interest rates for loans against fixed deposits (FD) align with those of FD deposits, with variations of 50 to 200 basis points. The collateral is the fixed deposit with the bank, allowing borrowers to avail loans ranging from 70 to 95 percent of the FD value. Similar to loans against mutual funds/shares, FD loans offer ease of access with minimal documentation and no credit history checks. Specific conditions apply, such as obtaining permission for minors’ FDs and joint account FDs, with the potential for FD account closure in case of loan default.
the variety of loans available offers individuals the flexibility to choose based on their needs, assets, and financial circumstances. Understanding the nuances of each loan type is crucial in making informed decisions when seeking quick financial assistance.