A loan is a credit facility offered by various banks and financial institutions. The borrowed loan amount can be used for various purposes which include purchasing a new home, pursuing higher education, financing medical emergencies, startup a business, and a lot more.
Let us talk about the 80 different types of loans in India and their specific features, to help you in selecting the right financial product that best suit your profile and requirements.
As the name suggests, personal need loans are often availed by salaried individuals. Personal loans help the households to meet any shortfall they experience in buying a house, car, children’s higher education, medical emergencies, and so on. Under the personal need loans category, there are several types of loans customized to fulfill the specific needs of customers.
A personal loan is one of the most popular types of unsecured loans that offer quick access to liquidity. Personal loans are provided by financial institutions based on criteria like type of employment, monthly income, profession, credit history, and repayment capacity.
It is also known as a multi-purpose loan, which you can use to meet any of your immediate needs. Ensure you have a stable income and good credit history to avail of this loan at the competitive interest rate.
Do you need an instant line of credit because of an unexpected expense? Do not worry if you are a salaried person and your bank offers the overdraft against salary facility. A salary overdraft is a form of credit that you can avail on your salary account, in which you can withdraw a specific amount over and above the balance in your salary account whenever you need it.
Avail a home loan to purchase a new house/flat or a plot of land where you construct the house, renovation, extension, and repair an existing house. The following are the types of home loan in India available for homebuyers:
Do not have a map for the land or property you are purchasing for? No need to worry about wherein a home loan without map comes into the picture. Some lending institutions offer this type of credit facility at competitive rates.
An overdraft facility on a home loan can be availed against your residential or commercial property. You can also avail the facility as a top-up on your existing housing loan or loan against property and enjoy the flexibility of withdrawing funds as and when you need.
It provides you with great flexibility in utilizing the limit as per your requirement and thereby reduces your expenses by paying interest only on the utilized amount.
With a NRI home loan, Non-Resident Indians (NRIs) can get home loans for investing in properties. The NRI home loans have lower tenure as the applicant earns a handsome income which demonstrates a higher repaying capability.
Home Construction Loan is a customized loan product designed for those applicants who own a piece of land and require financial support to construct their home. It allows easy management of a diverse range of expenditures involved in construction and has a flexible repayment period of up to 30 years.
If you have a property and are looking for funds but do not have a map for that property, it is slightly critical to get loan against such property. Still, some financial institutions exist and provide loan against property without a map.
A loan against property is a boon for salaried individuals. Now your property can take care of your Personal needs. Your wish to consolidate debts, education of your children, or even arrange funds for a marriage in the family can now be fulfilled with Property Power. With a loan against property facility, unleash the power of your property.
If you are a Non-Resident Indian (NRI) facing a shortage of funds and looking for money to fulfill a sudden medical crisis, higher education, marriage expenses, and so on, then an NRI loan against property is the right choice for you. Many reputed lending institutions offer the facility to NRIs at attractive interest rates and minimal paperwork.
Loans against securities are easily accessible in the form of an overdraft facility. You can obtain this loan by pledging against financial securities such as shares, stocks, mutual funds, fixed maturity plans, units, and bonds. Moreover, a loan against securities is an ideal way to make your investments work harder and smarter for you.
An education loan is a financial assistance availed by the students to meet their financial requirements to complete their courses. Students who wish to avail education loans are recommended to borrow based on their actual requirements as the loan tenure can vary to a great extent depending upon the lender and the loan amount borrowed by the student.
Not having enough funds to purchase a new car? No worry, a good second-hand car can be bought with the help of a used car loan. Used car loans are provided at competitive interest rates and come with a flexible repayment tenure of up to 7 years. Generally, lenders provide loans of up to 90% of the car’s value.
Most banks and financial institutions offer secured loans that require you to pledge an asset as security for the money you are borrowing from the lender. The asset secures the rights of the lender in case the borrower cannot make good the borrowings.
In simple words, let’s assume if you cannot repay the loan, then the lender still has some means to get back their money. The interest rate of secured loans tends to be lower as compared to those loans without security.
Get a secure loan by mortgaging your property and fulfill your personal and business needs. Whether you own a residential or commercial, or special use property, it is an asset that can be used as collateral against a loan, when you have a financial requirement. However, the loan amount ranges from 60% - 85% of the property value. To avail the best value on your property, you should negotiate with the representative of the lender.
Working capital loan is one such loan availed to fund the day-to-day operations of a business, ranging from employee's wages to cover accounts payable.
It covers the costs such as payment for staff, upgrading technology, leverage opportunities, procuring raw materials, paying an advance to suppliers, and debt payment. Purchase inventory, maintain cash flow, rental payments, and utility bills..etc. In reality, not all businesses see regular sales or revenue throughout the year, and sometimes the need for capital to keep the operations going may arise.
With a dropline overdraft, a borrower can overdraw funds from their current account up to a certain agreed limit, but at the same time, the actual withdrawal limit of the overdraft reduces every month from the sanctioned limit. The best part is that you will be paying interest only on the withdrawn amount and not on the actual borrowing limit. A dropline overdraft can be obtained in the form of secured and unsecured loans.
A bank guarantee is an act of promise given by a bank or any other financial institution to undertake the payment risk on behalf of its customers. A bank guarantee is given as a contractual obligation between the bank and its customers. Such guarantees are mostly used in the business of transactions that protect the third party from financial risks.
A letter of credit (LC) is usually a financial contract that works as a payment guarantee from the buyer to the seller. The LC is issued by a lending institution and ensures a timely and full payment to the seller. Letters of credit are used to minimize risk in international trade transactions where the buyer and the seller may not know one another.
If you are looking to purchase new industrial property or want to construct or renovate the property, then you may opt for an industrial property loan. An ideal product where savings from rentals can be used to pay EMIs for purchasing the property. Enjoy a quick loan disbursal process and a host of other benefits.
Whether you are planning to purchase new office space, expand your present business, or simply improve or renovate your existing office, Commercial Property is just the right solution for your commercial lending needs.
A commercial property loan allows you to avail high-value funding by mortgaging the commercial you own. This will be a great solution, if you are looking for ample, affordable financing, to buy expensive machinery or expand your business.
As the name suggests, builder inventory funding is offered by banks and financial institutions to builders or real-estate developers for developing real-estate projects.
Builder finances come with a customizable feature based on factors like project land acquisition, estimated project cost, and a detailed project assessment and valuation conducted by the financing company. The loan terms may also be customized across the project development cycle to meet specific needs.
A loan against rent receivables is a unique product designed to address the financial requirement of borrowers having self-owned property given on rent & enables them to get the required capital against the expected future rentals of the property.
A bank overdraft is the type of financial instrument that is given to borrowers by the lending institutions in the form of an extended credit facility, which comes into effect once the account balance reaches zero. In other simple words, a bank overdraft is an unsecured form of credit that is mainly used for covering short-term cash requirements.
Letter of credit discounting is a short-term credit facility provided by the bank to the beneficiary. In which the bank purchases the documents or bills of the seller (beneficiary) after he fulfills certain compliance requirements. Based on meeting such compliances as per the LC terms, the bank makes him/her the payment for a security or a fee.
This type of bank guarantee is given in the form of a non-funded-based instrument which is not convertible into the fund based. With a loan against bank guarantee, enterprises can purchase raw materials when the actual working capital limit is exhausted.
Opt for an Infrastructure construction loan when you wish to construct an infrastructure project. Most banks help you in raising the funds required to finance an infrastructure project.
An unsecured loan is a loan that does not require you to provide any collateral to avail credit facility. They’re also known as signature loans because a signature is all that’s needed if you meet the lender’s borrowing requirements. Hence, the borrower's credit score is taken into consideration to evaluate creditworthiness. Based on the credit score and financial history, the lender will decide whether as a borrower you are eligible or not.
For example, let’s say a borrower who availed an unsecured loan when he/she has a regular income and after a few months later, suddenly becomes unemployed and can’t repay the loan. Wherein the loan account goes into default and the borrower’s credit will be adversely affected. In such cases, the lender might decide to bear the financial loss as they can’t seize the debtor’s assets without going through the legal process.
A business loan is a borrowed amount of capital that is used for an investment in a new or existing business setup. Whether small or medium-sized enterprises (SMEs) or large businesses, it is absolutely important to understand how these loans work.
Business loans can be availed by individuals, business owners, entrepreneurs, self-employed professionals, MSMEs, large enterprises, and other business entities.
Unsecured business loans are offered by various banks and financial bodies for the purpose of business expansion, increasing cash flow, purchase of equipment/machinery, buy raw materials and to meet working capital requirements.
Professional loans are personalised credit offerings to working professionals like doctors and chartered accountants who are looking for funds to expand or start their practice. These loans are tailor-made to suit the financial needs of these professionals such as for clinic expansion or to set up a new office or branch. Professional loans are offered with simple eligibility criteria, minimum paperwork, and quick disbursal of funds.
MSME loans are offered to businesses that fall under micro, small and medium enterprise categories. Majorly, these loans are often given on a short-term basis to startups, small business owners, and other women entrepreneurs. However, the duration of MSME loans varies from bank to bank.
To put it simply, a capital loan is a loan that is taken to finance a company's day-to-day operations. Funds availed from this loan can be used for various purposes like debt payments, paying employee wages, managing overhead costs, paying suppliers, and covering other companies’ short-term operational needs. Remember one cannot use these funds to purchase long-term assets or make an investment.
Get funding on wide variety of equipment ranging from earthmoving, mining, road construction, material handling, concrete, and material processing equipment's. With construction equipment finance, get the advantage of choosing the type of loan that best suits your business needs and the best interest rate.
Supply chain finance is also known as supplier finance. It allows businesses to longer their payment terms to their suppliers while providing optimal access to their large and SME suppliers to get paid early. In which buyer optimizes working capital and the suppliers generates adequate operating cash flow, hereby minimizing the risk across the supply chain. As a result, it becomes a win-win situation for both the buyer and supplier.
Dealer finance is a type of financing in which the retailer helps you secure a loan through partner lending institutions. It is often sold to other third-party financial institutions or banks that purchase this loan at a discount. Thereafter, the bank collects the principal and the interest from the borrowers.
Vendor finance is a type of short-term credit facility through which an organization provides funds to borrowers for them to buy vendor’s inventory, products, services or property. Vendor finance is also termed as a trade credit that takes the form of deferred loans. Vendor finance also includes a transfer of shares of the borrowing company to the vendor.
You can avail a startup loan from a bank or a financial institution to raise funds to start a business of your own or expand your existing business. Various schemes are offered by the Indian government for startups and MSMEs. The rate of interest charged by the bank will depend on the loan amount availed by you and the repayment tenure.
Stand up India scheme facilitates bank loans between 10 lakh to 1 crore to at least one scheduled caste (SC) or scheduled Tribe (ST), one woman per bank branch for setting up greenfield enterprises. The enterprise must be engaged in manufacturing, services, or the trading sector. In case of non-individual enterprises, at least 51% of the shareholding and controlling stake should be held by either an SC/ST or Woman entrepreneur.
Healthcare is one of the most essential sectors. Running a clinic, nursing home, or hospital is an invaluable service to society. So, you need to ensure that your techniques are up to date with reliable and best-in-class equipment.
Expand your business and enhance your facilities with collateral-free medical equipment finance designed especially for doctors. This product provides long-term funding against the medical equipment purchased.
Factoring is a very common method used by exporters to accelerate their cash flow. The process enables the exporter to draw up to 80% of the sales invoice’s value at the point of delivery of the goods and when the sales invoice is raised.
Factoring enables an enterprise to obtain immediate capital or money based on the future income attributed to a specific amount due on an account receivable or a business invoice.
Get instant finance against your Agri commodities. A warehouse receipt finance provides a certain amount of liquidity to the farmers and prevents them from resorting to distressed sales of their produce at the time of harvest. Warehouse Receipt Loans help in avoiding distress sales at the time of harvest and also help processors meet their working capital.
A loan against credit card receipt is a type of unsecured loan. Lenders provide loans against your existing credit card receipt. It is the best option for those who need immediate cash to deal with urgent and unpredictable situations. When the cash withdrawal limit on your credit card is not sufficient to fund your financial needs, then you should prefer to opt for such loans.
The MUDRA loan is given under the Pradhan Mantri MUDRA Yojana (PMMY) to non-farming and non-corporate micro and small enterprises. MUDRA loan is offered in three different categories, namely, Shishu, Kishor, and Tarun’. These are categorized based on the level of development and financial requirements of the enterprise.
Most often, Project loans are big-ticket loans that require a huge investment. Therefore, banks or financial bodies ask you to pledge any collateral to avail such facility.
Project loans can be availed by new projects or one which has been in the market for years and looking for project expansion. These loans come with a great host of benefits.
Project loan is given to corporate borrowers for capital expenditure including setting up of new/upgrade manufacturing facilities, construction, and so on. This type of lending product is available to acquire fixed assets like land & building, plant & machinery..etc.
Take the right step into solar power project loan with hassle-free and easy financing schemes for Small Medium Enterprises SMEs. Solar power ensures savings on your electricity bills and more money to power your business needs. Investing in solar rooftops leads to great savings while protecting the environment.
Rooftop solar loans are used for acquiring and installing rooftop solar panels for fulfilling your capital requirements. It aids you to install roof-top solar panels which will reduce electricity costs and increase savings. Moreover, it is environmentally friendly.
Cold storage loan is a type of secured loan that requires collateral as a guarantee. With a cold storage loan, agriculturists can set up a warehouse/storage facility to store agricultural commodities. These are used to construct a new cold storage infrastructure or expand or modernize existing facilities. In most cases, funding can be received for about 75% of the total project cost.
Warehouse construction loans are provided for the building of storage infrastructure in rural areas to support and assist farmers to store their farm produce. The primary objective of providing financial assistance for warehouse setup is to assist farmers in realizing the full benefit of their farm produce and to prevent distress sale of the produce due to fear of spoilage.
Loan for school project is a customized loan product that can be availed by those who are planning to construct, renovate, and upgrade the infrastructure of the school project. School loans come at a competitive interest rate.
A College loan is another special lending product provided by various banks, non-banking financial companies (NBFCs), and financial institutions. This type of loan is offered to new and existing college projects.
A project loan for the hotel industry refers to a specific form of financing that is based on the viability of the project. Get a long-term loan for hotel construction, renovation, or expansion. Hotel funding comes at a competitive interest rate with flexible tenure.
Construction builder’s finance is a unique offering to real estate developers for projects they are developing. This product comes with customized offerings built around a real estate developer’s project acquisition and construction cost basis a detailed evaluation of the project.
Hydropower project requires huge investments, the cost of which depends on the specific project, location, technology, and the location of the project. With the excessive opportunity available in the market to fund such projects is quite easier to get capital.
Transportation logistic companies seeking finance can approach banks or financial bodies to meet their financial requirements. Project loan for transport logistics comes at a competitive interest rate and other hosts of benefits.
Energy Sector Loan
These types of loans are provided to the renewable energy sector by financial institutions. In addition, The Reserve Bank of India (RBI) has categorised the renewable energy sector under priority sector lending for loans up to a limit of Rs. 30 crores.
Do you want funds for water and sanitation projects set up? Then you can approach those banks and financial institutions that offer these types of customized loans. With a good financial track record and stable cash flow, you can qualify for water and sanitation funding.
This is another specific category of project loan for “hospital”, which means one can avail of such loan to set up, renovate, and expand of the existing hospital project. Get easy unsecured financing and ensure that your hospital or personal assets are not at risk.
Tourism and hospitality loans are provided by banks and financial bodies. Individuals, proprietors, partnership firms, LLP & corporates engaged in tourism and hospitality such as hotels, restaurants, caterers, fast food centers, bakeries, mess, tour operators, amusement parks, and houseboats are eligible for project financing.
The Government of India has launched various loan schemes for the healthcare industry. This credit facility is given in the form of a term loan, cash credit limit, bank guarantee, and import letter of credit. The maximum loan amount offered is up to Rs.100 Crore based on the borrower’s profile and their requirements.
Loan for power projects is given to all types of power generation projects based on renewable energy (RE) sources like solar, wind, biomass, small hydro, etc.
Fuel your business growth with innovative financing solutions. Most often, businesses engaged in exporting and importing require consistent finance to make the most of the business opportunities workable.
Whereas the exporter & importer loans help you in acquiring the required capital. Starting from tariffs to freight rates, duties, and fees, capital requirements run the complete scale. Import and export financing provide funding advances so the exchanging of goods can transpire.
A pre-shipment credit (INR) is known to any advance or loan or credit which is granted by any financial bodies to exporter for financing the purchase of goods, processing, manufacturing or packing before shipment are the common working capital expenses required by the exporter.
All types of exporters including merchant exporters, manufacturers exporters, trading houses, export houses, and manufacturers supplying goods to export houses, merchant exporters, and trading houses are eligible to benefit from post-shipment credit (INR).
This credit is being provided to an exporter based on the letter of credit that is issued in the exporter’s name to the business of the exporter. Typically, exporters in India can avail of pre-shipment credit in foreign currency and cut down the export bills in foreign currency at the post-shipment stage.
Get a post-shipment credit against export receivables up to 180 days or tenure as pre-defined by RBI. The loan can also be given against the security of export incentives such as duty drawbacks and also against undrawn balances in the invoice.
Suppliers' Credit is a lending product where supplier and buyer agree on payment terms so that the supplier gets paid at sight/ as per payment terms from his bank through LC negotiation. For supplier credit, it avoids the risk of importer’s credit by making a settlement with LC.
Cash your unpaid invoices and keep your business running seamlessly with export project finance. Export financing is an ultimate cash flow solution for many exporters. Typically, the export finance facilities the commerce of goods internationally. It allows the enterprises that sell products to other countries to get access to working capital before their clients pay for the products purchased.
Export bill discounting is a type of funding that international trade finance companies offer businesses to speed up payment and get businesses on their way to continued success. The main objective of export bill discounting is to allow businesses faster access to liquidity for the goods they have shipped to the buyer.
Foreign currency term loans (FCTL) are used to purchase indigenous machinery, import raw materials, and capital goods, repayment of existing rupee term loans, and fulfill working capital requirements in Indian rupees. Flexible financing facilities allow businesses to meet day-to-day needs, and short-term as well as long-term requirements to meet their vision and ambition. It helps corporates to reduce costs by providing FCTL and cash management services to ensure cash flow works seamlessly and efficiently.
A standby letter of credit (SBLC) is known as a legal document where a bank guarantees the payment of a particular amount to a seller if the buyer defaults on the agreement. A standby letter of credit is majorly used in international and domestic transactions where the parties to a contract do not know each other.
Packing Credit Limit (PCL) is provided to an exporter for financing the purchase, processing, manufacture, or packing of goods be shipment /working capital expenses. However, the period of the facility is based on export cycle of up to 6 months (180 days).
Buyers' Credit is a short-term working capital credit facility extended to an importer by an overseas lender such as a bank or financial institutions. With buyer’s credit, one can finance the import purchase for working capital and capital expenditure.
In the above article, you have read about all major types of loans. Other loans are a new category of loans often given to mid and large corporate borrowers.
Non-Banking Financial Companies (NBFCs) as the name suggests, are not banking companies. Financial institutions can raise money supply at a low rate like banks and end up raising funds at a higher interest rate. This causes NBFCs to seek for alternative options for raising funds to generate a higher return.
Pursue your growth by raising funds against your existing assets and investment without liquidating them. Promoter funding is majorly being used by promoters to grow their business or to increase their stake in the company, as also to convert outstanding securities into equity shares.
Venture debt is a debt financing availed by startups and early-stage companies. This type of debt financing is typically used as a complementary method to equity venture financing.
Sales bill discounting is a short-term credit facility that allows business owners to borrow money from banks and non-banking financial companies (NBFCs) when having late payments due from customers who are unable to manage their cash flow. This facility is used by business owners to free up cash flow by selling unpaid invoices bills of third parties as security for a loan.
Under purchase bill discounting, Bank takes the bill drawn by borrower on his (borrower's) customer and pay them instantly by deducting some amount as discount/commission. Thereafter, the bank presents the bill to the borrower’s customers on the due date of the bill and collects the total amount wisely.
Consolidation merges multiple debts into a single debt that is paid off monthly through a debt management plan or consolidation loan. Debt consolidation helps in reducing the interest rate on your debt and lowers the monthly payments.
Stress assets are equal to non-performing assets plus written-off assets plus restructured loans. When the assets are not performing, they become doubtful and non-performing assets. However, these assets can be financed with stress assets finance credit facility.
With Financeseva, you can easily compare and choose the right credit solutions that best suit your profile and requirements. To know your pre-approved loan offers on all the loans mentioned above. Just provide some basic information and unlock the pre-approved offer.