Loans

Which loan we should plan and take ? – Spini Blog

In this real round world, we are all tumbling in a lot of financial commitments. And for this, it becomes a need to step into a loan arena someday to fight and fulfill our demands.
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The word “Loan” though a threatening one, does help us in time of need. The question, “Which loan to go for?” hits your mind, when you have absolutely no clue of which one is best suited for you and that which is of less burden to you. It is tough to decide from the array of loans available in the market and which are squeezed at you through fancy marketing strategies. Read on to understand the choices.
Firstly, it’s important to know your need. This means, you must strongly analyse the big “WHY” you must take a loan in the first place. Considering the bitter fact that you will be paying bulk EMIs every month without giving any excuses, also becomes your primary point to be thought about. Next, you will sort your purpose as any of the below:
Education
Marriage
Buying a home
Business start up
Medical emergency
Miscellaneous
There is pretty much loans named after each purpose readily available. For eg. Education loan, home loan, personal loan etc.
Secondly, you will make a math of how much of that valuable paper-notes you will need. The total amount of money required, yes. Most importantly, the amount you can conveniently shed to pay up on your EMIs.
Thirdly, the tenurity or the duration of payment. This can be assessed based on the resource you will have to repay every month. Yes ofcorse, there is a preclosure option in most loan types. But, keep in mind, they come with a price. Plans must be kept pretty flexible based on market options. So be ready. The tenurity is mostly categorized by banks as short term, medium term and long term. Short term loans are those which are for less than a year. Medium term are between 1-3 years and long term loans last for more than 3 years.
Now that we have a fair understanding of things to bear in mind before you take up a loan, let’s now look a little bit into each of the loan types
Gold loan :
In an Indian scenario, this is the most sort after type. The reason being that most Indians believe the best investment is in this yellow metal. Gold is also considered auspicious. And so, there is always gold in most of the households. The interest rates are pretty high but knowing that this investment is lying idle, it can be utilized in times of emergency. We have also had the concept of pawn broking, an age old traditional method of cash against gold. However, considering the security of jewels pledged, there are many credible options in Gold loans market today.
Vehicle loan:
As the name goes, this loan is meant for buying vehicles. This has become very common today as a motorcycle or a car has become a basic necessity in every household. A lot of people use this to buy commercial vehicles too. The interest rates are considerably easy on the pocket and is suitable if u have a steady monthly income. This type of loan requires an income proof to be submitted.

Personal loan :
Most of the time there is no better choice than opting for a personal loan. Personal loans comparitively have bigger interest rates. On the other hand, they have been made very flexible to suit any pocket. When you just want money for no specific big need and for miscellaneous expenses like planning a vacation, when you fancy a gadget, etc., this is what you would have to take. It is a kind of unsecured loan which is given by banks based on credit worthiness and so you would not need to pledge anything. Banks scrutinize these applications a lot and is only provided to salaried, self-employed or professionals.

Home loans :
It’s everyone’s dream to fulfill their basic need, their own home. And usually this is an investment way beyond our ability to buy with just  our savings. The home loans come to our rescue in such times. One could either buy property, renovate existing property or use it to purchase a land. Apart from being long term, home loans are beneficial for tax saving for employees. Today, most employees take up a housing loan for this sole purpose. The borrowing rates are pretty fair but usually the tenure is 15-20 years. It comes in two interest options – Fixed and Variable. Its always better to choose the latter. 
Education loan:
Specially designed for students, these loans are made flexible for them, so they could work and return the debts. To avail this loan, students must have the admission offer in hand before applying for the same. This type of loan is granted for all kinds of studies and research and is highly beneficial especially in case of traveling abroad for education and for students who are looking at reputed institutions.

Agricultural loan:
Agriculture being the backbone of Indian economy, there has to be financial support to the farmers who give us this rich produce. This loan is specially formulated for farmers to aid them to buy fertilizers, huge equipments required for farming, seeds etc. They could conveniently pay up after the harvest is done.
Mortgage loan:
This is a type of secured loan where one has to pledge their belonging inorder to avail cash loan. Property, vehicles, etc can be kept as collaterals and cash can be borrowed against it.
The above are the widely used loan types. Apart from them there are the below loans you can opt for
  1. Loan against Fixed Deposits
  2. Loan against Mutual Funds or Shares
  3. Loan against Insurance policy
  4. Overdraft from banks
  5. Credit cards
  6. Commercial loans
  7. Consumer loans
It is never difficult to get a loan. If you have all the required documents and they are genuine, if your CIBIL score is high and if you have filled the loan application form, there is less chance your application will be rejected. Some banks have a list of blacklisted areas and blacklisted profiles. Unfortunately, little can be done if you fall under any of those categories with respect to Banks. That’s when Non- Banking Financial Corporations can help and this is a topic for another day.
Lastly, while you apply for a loan it is highly important to read the Terms and conditions thoroughly, provide Nominee details and understand the pre-closure options. Happy Loaning!!!

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