What is an unsecured loan?
Unsecured loans are loans that are provided by lenders without any collateral or any security. It does not have risk of losing your assets. Other than unsecured loans there are secured loans such as mortgages, pledges, etc. There is a necessary point to keep in mind that lenders verify your certain details such as your credit score, your past relation with your lender before disbursing your loan amount.
There are various kinds of unsecured loans-
A personal loan is not a huge amount loan in which money has been borrowed from a bank, or non-banking financial company (NBFC) to meet personal needs and day-to-day emergencies. These loans are the most popular unsecured loans and are not backed by collateral. Due to unsecured loans the lender cannot auction or sell anything the borrower owns. It secures you from the risk of Lossing your assets.
Personal Loan are usually a medium-term solution for managing your finances and can be used to help with expenses related to exotic travel plans, wedding, medical emergency, home renovation, amongst others.
Debt consolidation loan- you can get loan for consolidating existing debt from banks and other financial institutes.
Wedding loan- Wedding is precious ceremony in India it is also expensive. Everyone has dreamed of a grand celebration of their marriage. Bank and NBFCs offer unsecured loans as wedding loans.
Home renovation- These loans are less amount loans which can get unsecure loan for the purpose for home renovation.
Education loan- Education loans are provided for the purpose of higher education in India or abroad.
Financial institutions and banks supply unsecured loans for business purposes commonly known as Business loans. The rate of interest on these loans is higher than that on secured loans and these loans are payable in Equal Monthly Instalments (EMI). Business loans help the borrowers to uplift their business.
Funds are used to meet short-term working capital in the business
Loan Amount: Up to Rs 1 crore
Machinery loan- To get machines or equipment for your business. Such loans are secured by hypothecation of the machinery being financed. Cash flow from machinery acquired will be used to repay the loans. Duration of these loans is usually shorter than LAP (Loan Against Property). Repayments are made in equal instalments.