What is debt? How many types of loans? What is the way to get a bank loan? | Loan

What is debt? How many types of loans? What is the way to get a bank loan?

What is debt? What is a loan?

A loan is when a person borrows money from a bank, friend, relative or organization with the promise of paying interest along with the capital in the future. Capital is the actual amount of money that the person has borrowed and interest is the amount on which the person has to pay some extra money to the borrower.

Debt usually depends on three factors - capital, interest and interest rate (ie how many days you will have to pay interest on the loan).

Many of us prefer to borrow from a bank or a reputable company. Because the loan is available in the bank according to the government regulations

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What are the types of loans?

The type of loan based on the security provided

Loans based on secured loans are generally of two types (1) secured loans and (2) unsecured loans.

(1) Secured loan-

To get this type of loan you will need to give some collateral as security such as gold jewelry, house paper etc. If you are unable to repay the loan on time, the bank will be entitled to cover the deficit by selling the mortgaged item. The interest rate on secured loans is much lower than the interest rate on unsecured loans.

(2) Unsecured debt-

You do not have to pay anything as collateral to get this type of loan. In this case, the bank will decide whether to give you a loan after checking your credit score, relationship with you, your source of income, and some other factors. In this case the interest rate may be a little higher as the bank will not keep anything from you as security.

Type of purpose based loan

(1) Personal loan-

Generally, all types of banks offer personal loans. The specialty of personal loan is that you can spend this loan as you wish. You can use this loan for travel, on your own luxury, for buying on smartphone, for old loan interest, for emergency medical, home furniture etc. You can also take this type of loan with your own credit card. This type of loan can also be taken from the bank showing your credit score.

(2) Educational loan-

This type of loan is usually taken by students for higher education. Higher education can include a bachelor's degree, a master's degree, or a diploma certification course from a reputable institution or university. For this you need to prepare the admission papers with the bank. This loan is available for both domestic and international courses.

(3) Home loan-

Home loans are usually used for building houses, repairing houses, buying land. In this case the property will remain under the lender and after repayment of the loan the ownership will be transferred to the rightful owner.

(4) Vehicle loan-

This loan pays for the purchase of two-wheeled and four-wheeled vehicles. You can use this loan to buy a new or old four-wheeler. The loan amount is determined by the lender based on the on-road price of the car. However you will need to have some extra money for downpayment as 100% of the money is not available on this loan. The car will remain owned by the lender until the loan is repaid in full. You can buy a two wheeler with 5% to 20% down payment.

What is the way to get a bank loan?

To get a bank loan, you need to meet certain bank criteria and qualifications.

• Valid identity card
• Proof of residence
• A good credit score
• Proof of regular income
• The person must be 18 years of age or older
• Receipt of last 3-6 months salary
• The bank has a good relationship with you
• History of timely loan repayment

What documents are required?