What is Bank Loan?
A bank loan is the most common form of loan capital for a business.
A bank loan provides medium or long-term finance. The bank sets the fixed period over which the loan is provided (e.g. 3, 5 or 10 years), the rate of interest and the timing and amount of repayments.
The bank will usually require that the business provides some security (“collateral) for the loan, although in the case of a start-up this security often comes in the form of personal guarantees provided by the entrepreneur.
Bank loans are good for financing investment in fixed assets (such as plant & machinery, land and buildings). They are generally charged at a lower rate of interest that a bank overdraft. The interest rate can be either fixed (e.g. 8% per year on the amount outstanding) or variable (where the interest rate varies depending on the Reserve Bank base rate).
Types Of Bank Loan?
Bank Loans types are,
1. Business Loan
2. Car Loan
3. Education Loan
4. Home Loan
5. Loan Against Property
6. Personal Loan
A business loan is a loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest.
Businesses require an adequate amount of capital to fund startup expenses or pay for expansions. As such, companies take out business loans to gain the financial assistance they need. A business loan is debt that the company is obligated to repay according to the loan’s terms and conditions.
A car loan is a personal loan that allows the potential buyer to pay the vehicle off in monthly payments instead of having to pay the full price all at once. This means that a lending servicer or bank will pay off the car in full, while in return the borrower pays off the debt in monthly payments with an interest fee included as well.
A student loan is a type of loan designed to help students pay for post-secondary education and the associated fees, such as tuition, books and supplies, and living expenses. It may differ from other types of loans in that the interest rate may be substantially lower and the repayment schedule may be deferred while the student is still in school.
Education Loan aims to provide the much needed financial support to deserving students for pursuing higher professional or technical education in India and abroad. The education loan would be provided to those students who have obtained admission to career-oriented courses e.g. medicine, engineering, management etc., either at the graduate or post-graduate level.
Home loan is given for the purpose of purchase of independent house/flat, construction of independent house/flat, repair/improvement/extension of house/flat.
Loan Against Property:
Loan against property is a secured multi-purpose loan with longer tenure and lesser rate of interest than a personal loan. If you own a valuable asset in the form of a self-occupied house or a commercial property you can go for it. The criterion for applying for a loan against property is that it should be a freehold and self-owned property, having a clear and marketable title. The loan is given as a certain percentage of the property's market value.
Bank personal loans can help meet all your financial needs effectively. With simplified documentation and speedy approvals, availing personal loans couldn’t get easier.