Some examples of unsecured loans

1. Credit card

When a customer pays with a credit card, he or she is basically taking out a modest personal debt. No interest is levied if the debt is paid in full right away. If you don’t pay off some of your debt, interest will be charged every month.

Credit cards are quite convenient, but they need self-control to avoid overspending. Consumers are more eager to buy when they use plastic instead of cash, according to studies.

2. Flexi Loans

In this type of unsecured loan, you can avail funds from your pre-approved limit (which is generally fixed by your bank) and as when required, you can withdraw on your loan limit, any number of times and repay your amount with no extra cash, at no extra cost. This type of unique facility gives you full control of your finances, unlike rigid term loans.  

Based on the Flexi facility, loans are classified mainly into:

• Education loans: This type of education loan can be taken to complete full-time, part-time, or vocational courses in the fields of medicine, management, engineering, etc. Generally, it covers the basic fees of the course along with others expenses such as accommodation, practical fee, educational tour fee, etc. In such types of loans, the student is the main borrower. The moratorium period is the unique feature of this type of loan, in which the student has the option of not paying the EMIs until completing the course.
• Vehicle loans: Sometimes, a pre-approved loan provides by your bank to help you to buy a two or four-wheeler either on purchase of a new vehicle or a used one. In such cases, credit score, the ratio of debt to income, loan tenor, etc., play a crucial role in determining the pre-approval loan amount.

A loan is a type of debt that an individual or other entity takes on. The borrower receives a sum of money from the lender, which is generally a business, financial organization, or government. In exchange, the borrower agrees to a set of terms, which may include financing charges, interest, a repayment schedule, and other obligations.  

Individuals, company owners, and MSMEs in the trading, manufacturing, and service sectors were the primary beneficiaries of the loans. Various financing plans are available, depending on the type of the firm and its requirements. Let’s go through the many types, characteristics, and qualifying requirements for business/MSME loans offered by banks and NBFCs, as well as government-sponsored loan programs.

The two categories of loans accessible are secured and unsecured loans. Secured loans require you to put up anything of value as collateral in the event you are unable to repay your loan, whilst unsecured loans enable you to borrow the money without putting up any property (after the lender considers your financials).