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Bank Loans

Today, we hear about bank loans and many people don’t have a comprehensive idea about what a bank loan is. People take bank loans to fulfill their various financial needs such as buying a car, building a home, running a business or paying for their children’s education.

What is a bank loan?

A bank loan is a specific amount which is offered by a bank to a borrower. The amount has to be repaid with interest on or before a stipulated date. Interest is the amount that the bank charges as a cost of using the money. The bank or financial institution offering the money is known as the lender and the person or business receiving the money from the bank is known as the borrower. The loan amount is also known as principal. The borrower has the option of paying back the money in equal installments or as a lump sum payment.

There are both secured and unsecured loans offered by the bank. A loan is offered on the basis of a contract and additional loan covenants which the borrower has to comply with. Whether a bank will offer you a loan or not is dependent on a number of factors like your creditworthiness, the security that you provide against the loan, your financial condition and the amount of money you’re requesting for. Banks usually don’t lend money to those individuals who don’t have an established track record or creditworthiness.

Types of bank loans

There are different types of bank loans that serve different purposes of the customers. As a whole, bank loans can be broadly categorized into the following types:

  1. Home loan
  2. Personal loan
  3. Car loan
  4. Education loan
  5. Business loan
  6. Loan against property
  7. NRI loan
Home loan: A home loan is typically obtained to buy or renovate a home. The home that you buy works as the security against the loan.

Home loans can be further categorized into the following types:

  1. Home purchase loans
  2. Home improvement loans
  3. Home construction loans
  4. Home extension loans
  5. Home equity loans
  6. Land purchase loans
  7. Bridge loans
  8. Mortgage loans

Personal loan: A personal loan is meant for meeting various personal financial needs. These are unsecured loans that are offered with flexible repayment terms and also termed as consumer credit.

Car loan: Car loans or automobile loans are offered to finance purchase of a car or automobile. It is a secured bank loan.

Education loan: Education loans or student loans are offered by banks to finance education costs.

Business loan: Business loans are offered by banks for financing businesses.

Loan against property: A loan against property is a type of secured loan which is backed by a property.

NRI Loan: An NRI loan is a loan that is offered by the banks to the Non-resident Indians (NRIs) to meet their various financial requirements.

At any point of time in your life, you might need a bank loan. Getting a comprehensive idea about different bank loans will help you make a well-informed decision.



Bank Loans

Business Loan

Car Loan

Education Loan

Home Loan

Loan Against Property

NRI Loan

Personal Loan

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HUDCO

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