Overview
In this tutorial, we will learn about different types of bank loans. A bank loan is a sum of money a bank lends to borrowers such as individuals, businesses, or government entities. In return for the funds, the borrower agrees to repay the loan amount over a specified period, with interest. Bank loans can be used for various purposes, such as starting or expanding a business, purchasing a home, pursuing education, or covering unexpected expenses.
Types of Bank Loans
Different types of bank loans are as follows:
- Personal Loan
- Home Loan
- Business Loan
- Car Loan
- Gold Loan
- Education Loan
- Loan Against Property
Personal Loan
Personal Loans are credit that a bank offers to its customers to meet their immediate personal requirements, ranging from home renovation to purchasing a new laptop, reimbursing credit card liabilities, vacation, shopping, etc. A personal loan simplifies the customer’s cash flow and handles its immediate needs.
Home Loan
A home loan ( mortgage loan) is a secured loan used to finance the purchase of a new home or real estate property.
Business Loan
A business loan is a type of loan provided by the bank to businesses for various purposes related to their business operations, expansion, or investments.
Car Loan
A car loan is a secured loan specifically designed to purchase a car. The borrower applies for a car loan from a bank. The application process involves providing personal and financial information, including details about the desired car.
Gold Loan
A gold loan is a secured loan with gold ornaments as collateral.
The borrower provides gold jewelry to the lender( for example, a Bank ) as collateral. The loan’s value is determined based on the purity( 24k, 22k, 18k, etc.) and weight of the gold provided.
The loan amount is usually a percentage of the gold’s assessed value, typically ranging from 60% to 80%.
Loan Against Property
A loan against property (LAP or mortgage loan) is a type of secured loan where a property owned by the borrower is used as collateral to obtain funds from a bank. This loan is beneficial to the customer when other financing resources are exhausted.
Education Loan
An education loan ( student loan ) is a type of loan designed to help students and their families cover the costs associated with higher education, such as tuition fees, books, supplies, and living expenses.