At some point, each of us has likely considered starting an ambitious business, embarking on a home improvement project, completing an unfinished degree, or going on a dream vacation. For various reasons, we often explore financing options to help realize these aspirations to achieve various goals in life.
In India, there are loans tailored to meet every need. The lending landscape has become fiercely competitive, with new players such as NBFCs, micro-financiers, and FinTechs entering the market. Additionally, digitization has further fuelled demand in the industry. This piece aims to enlighten you on the various types of loans available, along with their eligibility criteria and required documentation.
Let's understand more about it in depth.
Home Loan
A Home Loan helps you buy a home of your dream home. There are now more companies that offer home loans, giving you more choices for lenders. Owning a house can make you feel more secure and like you have something valuable for the future.
ELIGIBILITY |
DOCUMENTATION |
Age |
KYC documents (address and identity proof) |
Monthly income |
Income documents (salary slip and bank statement) |
Existing financial obligations |
Property documents |
Credit history |
|
Loan Against Property
A Loan Against Property (LAP) is a common type of loan where you use your property as security to borrow money. In simple terms, you pledge your property to the lender to get a loan. Lenders usually give you 60% to 70% of your property's value as a loan amount. So, if your property is worth Rs. 1 crore, you could get a loan of INR 60 - 70 lakh.
Since LAP is a secured loan, the interest rate is relatively low. You can use this loan for various purposes, such as funding your child's education, marriage, or expanding your business.
ELIGIBILITY |
DOCUMENTATION |
Indian citizen |
KYC documents (address and identity proof along with PAN card) |
Age between 21-60 years |
Income documents (bank statement of previous 3-6 months, ITR, P&L and Balance sheet) |
Employed with a private or public limited company |
Valid property documents |
Minimum income threshold |
|
Business Loan
A Business Loan is used to acquire funds for business purposes. It helps businesses manage short-term capital shortages, address working capital needs, or invest in new technology to capitalize on market opportunities.
Business loans typically are unsecured loans and do not require collaterals. They have a quick loan approval process resulting in a fast and convenient way for businesses to meet their financial needs.
ELIGIBILITY |
DOCUMENTATION |
Indian citizen |
KYC documents (identity and address proof) |
Minimum 21 years of age |
Business ownership documents |
Minimum business turnover (varies across lenders) |
Business continuity proof |
Minimum business vintage of 3 years (Varies for metros & non-metros) |
Copy of ITR of the past 2 – 3 years |
You may also like to read: Different Types of Business Loans in India
Personal Loan
A Personal Loan is a type of unsecured loan that provides funds for various purposes such as vacations, medical expenses, or financial emergencies. You can obtain a personal loan from a bank or a non-banking financial company (NBFC). Because it doesn't require collateral, the interest rate for a personal loan is typically higher.
ELIGIBILITY |
DOCUMENTATION |
Indian citizen |
KYC documents (Aadhaar, PAN card, Passport, Voter’s ID) |
21 – 60 years |
Address Proof |
Minimum income per month (Varies for metros & non-metros) (varies across lenders) |
3 months’ bank account statement |
Employed with private or public company |
3-month salary slip |
Things You Need to be Mindful of as a Borrower
Whether you're applying for a Personal Loan, Loan Against Property, Business Loan, or Home Loan, certain factors are crucial for borrowers to keep in mind:
Now that you know about various types of loans, choose and apply for a loan based on your requirements to fulfil your financial needs.
Also Read: Borrower's Checklist for Loans
Godrej Capital is the financial services arm of Godrej Group which offers Home Loans, Loan Against Property and other secured loans. With innovative products and offerings, customers can get hassle-free loans on easy terms and conditions. Click here to know more about the offering.
Disclaimer: The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com