Types of Unsecured Loans

What are the Types of Unsecured Loans Available in India?

Conventionally, there are two types of loans available in India, secured and unsecured. However, in case of emergency financial requirements, unsecured loans are often the most viable financing solutions. Lenders offer unsecure advances loans such as personal loans only to eligible borrowers. Unsecured credits are popular as they do not require any collateral. Nonetheless, there are different types of unsecured loans available in India.

Know the Types of Unsecured Loans in India

Since such a loan can be availed of without mortgaging any collateral, the risk of asset loss is eliminated. However, due to lack of assets, applicants need to undergo a stringent eligibility check before loan approval. Factors such as a good past relationship with the lender, an excellent credit score and a great repayment history certainly increase the chances to avail of this loan.

Following are the most popular unsecured loans available in the market.

1. Personal loan

It is the most popular unsecured loan in India, known for offering instant funds. Since this loan is unsecured, the interest rates are usually on the higher side. However, with a stable income source and a good credit score, enjoy competitive interest rates on this credit without much hassle.

Additionally, a personal loan does not entail end-use restrictions and therefore can be used for various purposes. These include -

• Home renovation
• Paying medical bills
• Financing domestic or international travel
• Consolidating existing debts
• Funding child’s education
• Addressing emergency or unplanned expenses

2. Business loan

As the name suggests, this fund is solely offered to established businesses. To avail of this fund, applicants need not keep collateral with the lender. Eligible borrowers can avail of the funds and utilise the same exclusively to meet business expenses.

Note that both these types of unsecured loans come with the term loan and flexi loan facilities. Individuals can withdraw funds as and when required with a Bajaj Finserv Flexi Loan from a pre-approved credit limit. Borrowers can pay interest only on the funds utilised and not on the total loan sanctioned.

Besides being bifurcated as per who can avail the advance, an unsecured personal loan can be classified on the basis of how it can be used.

Types of Unsecured Loans in India Based on Utilisation

A personal loan is also available under different names based on its purpose -

• Debt consolidation loan

Get a personal loan to consolidate all existing debts into a single one. With this loan, combine all loan EMIs and credit card bill(s) into one single EMI repayment on a particular day of every month. It reduces the repayment burden with decreased interest payable.

• Education loan

A personal loan can also be utilised as a collateral-free education loan. With the funds, cover all the education-related expenses and other miscellaneous costs that may arise while pursuing a course.

• Wedding loan

Apart from a conventional personal loan, also opt for a wedding loan to cover the expenses related to this big event. To avail of the funds, individuals need to comply with a set of eligibility requirements.
Besides the types of unsecured loans mentioned above, Bajaj Finserv also offers pre-approved loans, which reduces the loan processing timing to a great extent. Provide your name and contact number to check your pre-approved offer online.

Also Read:-

What is the difference between Secured and Unsecured Loan?