Types of Loan !

  • Table of contents         
  • History of loan 
  • Loan type 
  • safe loan                                                                                                                                                                                                                                                                                                   1) Home or mortgage loan                                                                                                               2) Car loan                                                                                                                                       3) Gold loan                                                                                                                                         
  • Unsecured loan 
  • Personal loan 
  • Education loan                                                                                                                                                                                                                                                                                             Loan process                                                                                                                                                                                                                                                                                     Income Tax Benefits                                                                                                                             
  • Tax exemption on education loan 
  • Tax rebate on car / auto loan 
  • Tax relief on personal loans                                                                                                                                                                                                                                                                           In finance, money is borrowed for one or more people, organisations, or other individuals, organisations etc.                                                                                                                                                                                                                                                                                     The recipient (i.e. the borrower) lends a loan, and is usually liable to pay the interest on that loan or loan, it is paid, and also to repay the original amount borrowed.
Document giving proof of loan which is a promissory note, in addition to the other conditions, in general, specify the principal amount of the borrowed amount, the interest rate from the lender and the date of repayment.

The emphasis is on the re-allocation of the subject asset for a fixed period of time between the bank, NBFC, etc., and the borrower i.e., until the loan is completed, the property is owned by the lender party .

The interest provides an incentive to engage the lender in the loan. In a legal loan, each of these obligations and restrictions is enforced by the contract, which can also be placed by the borrower under additional restrictions known as loan terms.

Although this article is centred on monetary loan, any physical item can be lent in practice.

Working as a loan provider is one of the main activities of financial institutions such as banks and credit card companies. For other institutions, issuing a debt contract like Bond is a funding source.


Lending in any form is a very different nature and practice probably comes back in time. Now, it is not to say that there is no document about the history of the loan. In fact, there are thousands of years of historical documents, which show the development of the credit industry.

Some early monetary loans have been recorded in the Bible! There are substantial evidence of a rich borrowing industry in other cultures, including Roman and Ancient Greeks, which dates thousands of years ago.

But the oldest records go back to Assyria and Babylonia, where traders of that time gave grain loans to farmers and traders.

 Even by modern standards the system was quite sophisticated in place, the lenders accepted both deposits and acted slightly like the Bureau Day change.

The main European economies did not really catch on the power to lend around the 13th century when all powerful churches realised the financial benefits of raising very important revenues in the form of interest.

Between that time and the industrial revolution, big banks and financial organisations were formed and modern loan markets began.


There are many types of loans, which have the first two main branches, safe and unsafe loans. Home Loans, Car Loans and Personal Loans etc. are the lower types of these branches.


A secured loan is a loan in which the borrower mortgage some property (such as a car or house) in the form of a charity. On the repayment of the loan, the mortgagee property that gets the full borrower back to the borrowers.
A mortgage loan is a very common type of secured loan, which many people use to buy residential properties. The lender, usually a financial institution, is protected - the house he bought on the title for the property.

The house is of the creditor till the loan is fully paid. If the borrower defaults on the loan, the bank will have the legal right to resell the home so that it can recover the loan amount.

Home Loan: 

A home loan is also a type of mortgage loan in which the home purchased house is pledged. But the difference in home loan is that it is available only to buy the first house and hence interest is less than any loan.

The main reason for this low interest rate is the fact that if the house costs generally increase, then if the loan is not filled, then the house can be easily paid by selling, besides no one would want to lose his house, There is less chance of filling.
Car Loan is a necessary loan, which helps you to become the owner of your own dream car. However, ownership of a car in a car (normally a vehicle) in India is an expensive proposal, which usually requires the promotion of financial assistance from banks / financial institutions on a large scale who have loan schemes in this regard.

Almost all private / public sector lenders in India offer car loan options with terms and conditions which are highly customer friendly, affordable and simple. With a very simple list of credentials, income and credit history qualifications, you can become the owner of a new car of your own choice.
Gold loan is a secured loan, because loan is given against banks against gold collateral. Banks provide loans with this loan by keeping gold loans and coins, which are refunded on the repayment of the loan amount which is payable.

Secured loans with gold ornaments are offered for a medium term period and generally tired paper is processed within minutes without the need for work.


An unsafe loan is a loan that is issued and supported only by the creditworthiness of the borrower rather than collateral of any kind.

 Unsecured loans are sometimes known as sign loans or personal loans - as collateral, are acquired without the use of property or other assets.

Terms of this type, including approval and receipt, are often casual on the borrower's credit score.

The borrowers must have a high credit rating for certain unsecured loans.

Types of Main Unsecured Loans:
Simply put, the personal loan facility is an unsecured loan, which the individual or the NBFC uses to meet their personal needs.

It is provided on the basis of major criteria such as income level, loan and employment history, repayment capacity etc.

It can be used for any personal financial need and the bank will not monitor its use. It can be used for your home, marriage-related expenses, a family holiday, education for your child, purchase of latest electronic equipment or home appliances, unexpected medical expenses etc. or in any other emergency.
As a business owner / business owner, you are always looking for opportunities to develop your business. But when those opportunities come, you really need money to take advantage of them.

It is very risky to borrow from an unorganised source because it will get you a very high interest rate (3% monthly to 10% !!!). There are many other risks involved in taking the necessary money in this way, especially when you are new to the market and when your business is emerging.

 Keeping all the risks in mind, you also need a commercial loan for its financial part. You have two basic options from banks: safe and unsafe business loans.

By taking business loan from banks, you will feel the interest rate and security of your self-esteem. Upon taking a business loan and laying that debt, your credit score also increases so that you are comfortable in taking a loan in the future.
An education loan, also called Student Loan or Education Loan, is borrowed to meet education or school expenses. Payment for the six-month grace period after school and after graduation is often postponed.

 It includes basic course fees and other related expenses such as (college) housing, examination and other diversified fees and a student is the main borrower but his parents, spouse, co-applicants can be.

It is provided to those students who want to get higher education in India or want to get higher education abroad. The maximum amount given for study in India and abroad is different and different from one bank to another.


If you are stuck for cash, then a loan can be a better future ticket. However, you should be careful while seeking a loan, and follow the guidelines laid down by the lenders.

 Being thoughtful about how to take a loan will help you find and obtain the right loan for your specific needs.

First, the reader understands his needs how financial help is needed. He will make the first decision after reading the terms and conditions of the loan given above.

 After that, take more information about the type of loan that will be easily available here, keeping in mind the interest rate, profit and loss and other important issues in the right decision.

Then he should get the documents required for such loan, such as identity card, pen card and income proof and property papers etc., to his nearest bank or his advisor, and further the procedure will be explained to you by those people.

Before applying for a loan, consider these factors:

Taking a loan is a big financial decision for which you need to make informed choices. Here are some factors:
  • Credit Score :                                                                                                                            You must check your credit history before applying for a loan. Credit history is a record of your previous borrowings if there is any and repayment record.                                                                                                                                                                                                                       It will tell whether you are responsible for prepayment or have already paid the payment. The credit score of 750 and above is excellent.                                                                                                                               
  • Interest Rate :                                                                                                                          Actually check the loan interest rate before applying for one. The loan rates for those loans, which usually require collateral, are low.                                                                                                                                         
  • Processing Fee and Other Charges :                                                                                         When you apply for a loan and if you miss the payment deadline for your loan, you will have to pay the processing and penalty fee respectively. These fees and fees depend on the loan amount and the bank.


Because the policies of the Government are made by keeping in mind the general needs of all kinds, income tax benefits are mostly found in the same type of loan which is more essential such as home loan.

Some of the most important aspects of tax benefits on home loan in India are given below:
  • Principal and interest paid on home loan are both eligible for tax deduction .                                   
  • Tax benefits on repayment of home loan are given under Section 80C of the Income Tax Act. The maximum amount of the deduction is Rs. 1,50,000 which is the result of the figures raised by the Finance Ministry in the budget 2014-15.                                                                       
  • Tax deduction for home loan is only valid if the construction of the property has been completed and not during the time when the property under construction has been purchased.        
  • Customers who invest in under-construction properties do not enjoy tax rebates till the completion of the construction. However, such customers have to pay service tax on loans taken by them to buy the property.                                                                                                      
  • Better news for customers buying property between April 2014 and March 2015. These customers can avail the tax deduction on stamp duty and registration fee which they have paid to get the property. This deduction is Rs. Subject to a maximum limit of 1,50,000 .                         
  • For the first time, the homeowner who has purchased a property between April 2013 and March 2014, provides tax benefits of Section 80EE 1,00,000 of the Income Tax Act.                      
  • Section 24 of the Income Tax Act reduces the amount of interest on the home loan by purchasing, renewal, reconstruction, repair, or loan for the purposes of construction. Maximum deduction allowed under section 24 is Rs. 2,00,000.                                                                           
  • If the property is not in self-occupied then there is no upper ceiling for deduction under section 24. If the reason for not staying on the property is related to some employment, business or profession, then the limit of 2 lakh is applicable.
  • Tax benefits for education loans are given under Section 80E of the Income Tax Act.                         
  • Tax benefits are only applicable when education loan is taken from any financial or approved institution .                                                                                                                                            
  • Higher education loans are offered for those courses which any person has decided to choose after completing their senior secondary school level in India or abroad .                                               
  • Interest paid only for education loan repayment is eligible for tax deduction .                                
  • Tax benefits on education loans can be taken for full loan repayment period or up to 8 years, whichever is earlier.                                                                                                                            
  • There is no limit to the maximum interest amount on which you can claim tax deduction .              
  • The deduction of interest on education loan can be claimed only by the person whose education loan has been taken.                                                                                                                             
  • Tax benefits on education loans apply only when repayment of loan has already been started by the loan borrower.                                                                                                                                
  • Almost all education loans in India come with a moratorium period, which usually occurs after one year or 6 months after the student gets a job.                                                                                                                                                                                                                                During the moratorium period the interest is earned and it is taken into account when the final monthly loan instalment is calculated by the loan bank.
Car loans received by individual customers do not offer any tax benefits. Car loans received by self-employed persons for vehicles used for business purposes are eligible for tax deduction under Section 80C of the Income Tax Act.

Personal loans received by the customers are eligible for tax exemption only if the loan is sought for business purposes.

Apart from this specific case, personal finance does not offer any form of tax rebates to customers.

thanks for the time .

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