Types of Personal Loans in India

In every individual’s life there comes a moment where you urgently need a specific amount of money which can’t be covered by your savings. Here instead of borrowing small chunks of money from various relatives or other sources, you can easily opt for a personal loan from a bank or NBFC. A personal loan means to borrow money from a financial institution, for personal (not professional or business) use. Personal loans are usually short or medium term loans as they have shorter tenure compared to other types of loans. Generally you don’t have to specify the reason for the loan to the lender (bank or NBFC). You don’t need to keep anything as collateral and the formalities to get this loan are minimal. You can take a personal loan to meet your various needs. A personal loan can be taken to fulfill any of the following purposes:

1. Consumer Durable Personal Loan:
In today’s modern era, having a fully furnished house is necessity. A house equipped with all the modern electronic devices is a dream of every Indian family. Every household needs television, microwave, refrigerator, geyser, laptop or computer, food processor, air conditioner etc. to fulfill their day to day needs. But buying such consumer products is not easy as they are quite expensive. That’s why banks and NBFCs have come up with ‘Consumer Durable Personal Loans’. Banks and NBFCs give away this unique loan specifically to buy these products. The amount granted for this type of loan ranges from Rs. 10,000 to Rs. 1,00,000. The maximum tenure given for this loan is 5 years. Many banks provide 100% finance to buy the desired products. The interest rate for this type of personal loan ranges from 16% to 22%.

2. Festival Personal Loan:
India is a country of festivals. Every day someone is celebrating some kind of festival. For every festival, people need finances to purchase various festival goods. In major festivals like Diwali, Christmas or Onam people purchase major household goods, expensive clothes, gifting items etc. Festivals do not come cheap and even a festival bonus from your employer can’t cover your festive expenses. Many times people need small amounts of loan to fulfill their festive dreams. Thus banks provide special ‘Festive Personal Loans’ ranging from Rs. 5000 to Rs. 50,000. You can repay the festive personal loan by EMIs and the maximum tenure offered is 1 year. The interest rate changes from bank to bank.

3. Wedding Personal Loan:
A wedding day is not just a day of ritual. It’s a special day which brings two families together with holy bonds of matrimony. Every bride and groom wants their wedding day to be special and magical. But every magic has its price. Any Indian wedding is a ‘Big Fat Indian Wedding’ in some or the other way and it surely comes expensive. An Indian wedding can’t be financed just using the family savings. The designer clothes, jewellery, catering, decorations, venue rent, gifts and many more expenses are to be paid in a wedding. Thus many banks and NBFCs give away special wedding personal loans for wedding. The amount allotted depends on various factors like the applicant’s income, CIBIL score etc. The interest rate for a wedding personal loan ranges from 10% to 20%. The maximum repayment period is 5 years.

4. Travel Personal Loan:
Many people love to travel and experience new destinations, culture and food. But no matter how earlier you book your tickets or how cheap location you find, you have to spend money. Be it domestic or international, going on a holiday is not a financial piece of cake. Traveling to the destination, hotel stay, food expenses, shopping for souvenirs and other local expenses are something you can’t escape from. Many cancel their trips looking after such expenses but you don’t have to do that anymore. Many banks and NBFCs understand that travelling rejuvenates you and thus they offer unique personal loan to fulfill your travelling desires. The interest rates for travel specific personal loan start from 11% and the tenure is from 12 to 60 months. The amount allotted depends on various factors like the applicant’s income, CIBIL score etc.

5. House Renovation Personal Loan:

Living in a well built house is a primary need of every human being. People who own a house feel the need of renovating the house after a few years. The renovation can be of any nature: just renovating the interior, renovating the structure itself etc. Any kind of renovation is expensive when it comes to housing. Thus people opt for personal loan specifically for house renovation purposes. Banks and NBFCs give such loan for tenure of as long as 5 to 7 years. The interest rate ranges from 9% to 11%.

6. Medical Emergency Personal Loan:
Medical emergencies are highly unexpected and unpredictable emergencies. Many people do not have insurances to cover expensive medical treatments and many times even insurance cover can’t fulfill one’s needs. In such situation you can opt for a personal loan to pay off your heavy medical bills. Banks offer medical emergency personal loans for a maximum tenure of 5 years. The interest rate for this type of personal loan changes from bank to bank.

7. Debt Consolidation Personal Loan:
Many people find themselves paying off multiple debts at the same time. These multiple debts can be from credit card, other type of small term loan or a loan taken from a relative or friend. Keeping a track of so many debts and remembering to pay them off can be a tricky job. Thus you can opt for a personal loan to consolidate your debts. Here you can get a loan, pay off all your debts with the loan money and then pay that only one loan debt. This is a much wiser financial decision to pay off your debts. It also helps to build a strong CIBIL score. Banks and NBFCs give away loans ranging from Rs. 50,000 to Rs. 5,00,000 with interest rates starting from 11%. The repayment period ranges up to 60 months.

So stop looking for reasons and go for a personal loan today!

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