What is a loan?

Loan is when an individual, organization or an entity lends money to other individuals, organizations or entities.

What are the types of loans?

The various types of loans in India include- Personal loans, Home loans, education loans, Car loan, Credit Card loan, Two-wheeler loan, Business loan, Gold loan, Loan against FD, Loan against insurance and loan against mutual funds.

What is a personal loan?

A personal loan is an unsecured loan which can be taken from banks or financial institutions by individuals to meet their personal needs. Banks provide personal loan after checking for some basic criteria like – income level, employment history, credit rating and repayment capacity of the borrower.

What is a home loan?

A home loan is a sum of money borrowed from a bank or financial institution to purchase a house. The property is mortgaged as a security to the lender till the time of repayment of loan.

What is an education loan?

An education loan is the amount of money borrowed mainly by students to cover the course fees and other related expenses like accommodation, exam and other miscellaneous expenses. A student is the main borrower however parents can be the co-applicants.

What is a car loan?

Car loan is a personal loan which is borrowed by an individual to purchase a car.

What is a secured loan?

A secured loan is the one where the borrower needs to pledge collateral with the lender. The borrower can pledge gold, or can mortgage their commercial and housing space.

What is an unsecured loan?

An unsecured loan is the one where the borrower does not need to provide any collateral. They are given out on the basis of the credit worthiness of the borrower and does not require any asset as a security to the lender.

What is EMI?

EMI stands for Equated Monthly Installment. It is a fixed amount which comprises of both- the principal and the interest. It is paid by the borrower to the lender of money at a specified date every month.

What is a fixed rate of interest?

A fixed rate of interest is the interest rate that remains fixed either for the term of the loan or for a part of it.

What is a floating rate of interest?

Floating rate of interest is the one which changes over the duration of the loan. The rate of interest moves up and down as per the market rates or along an index.

What is a demand loan?

A demand loan is the one which is repaid by the borrower on demand by the bank. The entire amount of loan is disbursed by the bank and the borrower needs to pay interest on it. The sum is returned to the bank either in lump sum or as per the discussion with the bank.

What is a term loan?

Term loans are those which are lent for a period of more than a year. The repayment of such loans is spread over a longer period. Term loans are taken for purposes like business, renovation, modernization, expansion etc. and are generally secured loans.

What is pledge?

It is the cash deposit or the placing of the owned property by the borrower to the lender which is kept as a security for a loan or an obligation. In case of default the pledgee has the right the confiscate or sell the property that has been pledged.

What is meant by mortgage?

A mortgage is a legal agreement which gives the conditional right of ownership of an asset or a property from the owner of the asset to the lender and is used as a security for a loan.

What is meant by hypothecation?

It is a charge upon any movable property created by a borrower in the favor of a creditor who is secured without the delivery of the possession of the property to the creditor. It is used as a security for a loan. It includes a floating rate of interest.

What is meant by credit score?

Credit score is the number which determines your credit rating in case you want to avail a financial service.

What is meant by pre-closure?

Pre-closure means repaying the amount of loan completely before the tenure of the loan has come to an end.

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