Types of Loans in India

India offers a wide variety of loans tailored to meet different financial needs. These loans can be broadly classified into secured and unsecured loans. Let's look at the most common types:

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1. Personal Loan

• Purpose: Wedding expenses, travel, medical emergencies, home renovation.

• Secured/Unsecured: Unsecured

• Loan Amount: ₹10,000 to ₹40 lakh

• Tenure: 1 to 5 years

• Interest Rate: 10% – 24%

• Eligibility: Based on income, credit score, and employment status

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2. Home Loan

• Purpose: Buying, constructing, or renovating a house

• Secured/Unsecured: Secured (property as collateral)

• Loan Amount: ₹5 lakh to ₹10 crore+

• Tenure: Up to 30 years

• Interest Rate: 8% – 10%

• Tax Benefit: Yes, under sections 80C and 24(b) of the Income Tax Act

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3. Education Loan

• Purpose: Higher education in India or abroad

• Secured/Unsecured: Both options depending on loan amount

• Loan Amount: Up to ₹50 lakh+

• Tenure: Up to 15 years

• Interest Rate: 8% – 12%

• Moratorium Period: Course duration + 6 to 12 months

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4. Vehicle Loan (Auto Loan)

• Purpose: Purchase of two-wheelers or four-wheelers

• Secured/Unsecured: Secured (vehicle as collateral)

• Loan Amount: Up to 90%–100% of on-road price

• Tenure: 1 to 7 years

• Interest Rate: 7% – 12%

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5. Business Loan

• Purpose: Business expansion, inventory purchase, or working capital

• Secured/Unsecured: Both options available

• Loan Amount: ₹50,000 to ₹2 crore+

• Tenure: 1 to 5 years

• Interest Rate: 10% – 22%

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6. Gold Loan

• Purpose: Quick cash using gold ornaments as collateral

• Secured/Unsecured: Secured

• Loan Amount: Up to 75% of gold's market value

• Tenure: 6 months to 3 years

• Interest Rate: 7% – 14%

• Processing Time: Instant or within hours

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7. Agriculture Loan

• Purpose: Crop production, equipment purchase, irrigation, land development

• Secured/Unsecured: Usually secured

• Loan Amount: Based on requirement and land holding

• Tenure: Short-term (6 months) to long-term (15 years)

• Interest Rate: Subsidized under schemes like KCC

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8. Mudra Loan (Under PMMY)

• Purpose: Supporting micro and small businesses

• Secured/Unsecured: Unsecured (usually)

• Loan Categories:

  • Shishu: Up to ₹50,000

  • Kishore: ₹50,001 to ₹5 lakh

  • Tarun: ₹5 lakh to ₹10 lakh

• Interest Rate: 8% – 12%

• Tenure: Up to 5 years

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9. Loan Against Property (LAP)

• Purpose: Any personal or business need

• Secured/Unsecured: Secured (property as collateral)

• Loan Amount: ₹5 lakh to ₹5 crore+

• Tenure: Up to 15 years

• Interest Rate: 9% – 13%

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10. Consumer Durable Loan

• Purpose: Purchase of appliances, gadgets, electronics

• Secured/Unsecured: Unsecured

• Loan Amount: Up to ₹5 lakh

• Tenure: 3 months to 2 years

• Interest Rate: Often zero or nominal (in tie-up offers)

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11. Credit Card Loan

• Purpose: Short-term borrowing via card or EMI conversion

• Secured/Unsecured: Unsecured

• Loan Amount: Based on credit limit

• Tenure: 3 to 24 months

• Interest Rate: 13% – 36%

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12. Emergency/Instant Loan

• Purpose: Small-ticket urgent needs, often via digital apps

• Secured/Unsecured: Unsecured

• Loan Amount: ₹5,000 to ₹5 lakh

• Tenure: 7 days to 12 months

• Interest Rate: 15% – 36%

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Secured vs Unsecured Loan Summary