Types of Personal Loans

• Pension Loan

• Festival Loan

• Consumer Durables Loan

• Personal Computer/Mobile Phone Loan

• Medical Emergency Loan

• Agriculture Loan

• Loan for Debt Consolidation

1. Wedding Loan

India is known for lavish wedding ceremonies. The day of the wedding is definitely one of the most important days in the lives of not only the bride and the bridegroom but also their parents and family members. Everyone, therefore, wants to make this day special and memorable which may involve extravagant spending and one may not have enough liquid funds available at their disposal. For this reason, many families apply for a wedding loan.

Key Highlights

• A wedding loan can be applied for either by the would-be bride/bridegroom or by a family member.

• The loan amount can be as low as ₹1,000 and can go up to ₹25 Lakhs.

• The repayment tenor for a wedding loan is anywhere between 3 months and 6 years.

2. Travel Loan

Vacations, especially foreign vacations, can be heavy on your pocket. If you are planning a holiday with your family or friends at an exquisite destination, you may consider applying for a travel loan to ease your financial burden. A travel loan is a personal loan availed to fund your holiday expenses. Often, you also get complimentary travel insurance with travel loans.

Key Highlights

• Simple application process and easy approval.

• Most banks will grant you a travel loan of up to ₹40 Lakhs.

• The repayment tenor of the loan can be up to 5 to 6 years.

3. Home Renovation Loan

You can get a home loan to buy a new house, but what if your old house is in urgent need of repairs and revamps? That’s where a home renovation loan comes into the picture. A home renovation loan is a personal loan granted by a bank/NBFC to provide for the cost of renovation of your old sweet home. When you renovate your old house, you not only get a better place to live in, the economic value of your old house also increases significantly.

Key Highlights

• The loan amount can be anywhere between ₹2 Lakhs and ₹40 Lakhs.

• The repayment tenor for a home renovation loan can go up to 30 years.

4. Education Loan

Apart from secured education loans that are granted against collateral such as your graduate degree or a real estate property, many lenders also offer unsecured personal loans to help you fund your education. You can use this education loan to pay your tuition fee, residence fee and to provide for any other academic requirements.

Key Highlights

• Most banks will grant you a personal loan to fund education-related expenses of amounts up to ₹20 Lakhs.

• The tenor of a personal loan taken to fund education can go up to 5 to 6 years.

5. Pension Loan

If you are a retired individual, it might sometimes be difficult to make both ends meet, especially if there are medical bills to account for. For such individuals, some banks offer pension loans. A pension loan is a special type of personal loan meant specifically for retired individuals. Since it is a loan only for retired individuals, the regular eligibility criteria for other personal loans are not applicable for pension loans.

Key Highlights

• Pension loans are granted only to those retired individuals who get a regular pension.

• The loan amount can be 7 to 10 times the amount of the pension drawn in the month preceding the month in which the loan application was submitted.

• The repayment tenor for pension loans can be 5 to 6 years.

6. Festival Loan

Festival celebrations can often account for expenses that you might not have planned for while budgeting. Some banks and NBFCs offer personal loans to provide for the extra expenses incurred in festival celebrations. Most banks will grant you festival loans of amounts only up to ₹50,000.

7. Consumer Durables Loan

It is another type of personal loan. As the name suggests, a consumer durables loan is provided by banks and NBFCs to provide for the necessary funds for purchasing consumer durables such as air conditioner, refrigerator, TV, washing machine, etc. You can easily get a consumer durables loan of amounts up to ₹5 Lakhs from banks and NBFCs for purchasing such white goods.

8. Personal Computer/Mobile Phone Loan

In this technology driven era, computers and mobile phones have become inseparable parts of our lives. Many banks and NBFCs therefore offer personal loans of small amounts just for this specific need of the borrowers. In many cases, you also get a complimentary insurance cover for the purchased item with the loan.

9. Medical Emergency Loan

Medical emergencies seldom come with a warning, and with the rising cost of medical treatments and hospital bills, it is very much likely that you do not have enough liquid cash available with you at the time of an emergency. In such a situation, an instant medical emergency loan can be a lifesaver. Depending upon your eligibility and creditworthiness, you can easily get a medical emergency loan of amounts up to ₹ 25 lakhs for a tenor of up to 5 to 6 years.

10. Agriculture Loan

An agriculture loan is a personal loan granted to farmers to support them in farming and agricultural activities. Agriculture loans are usually offered at a lower interest rate and have a flexible repayment tenor.

11. Loan for Debt Consolidation

Debt consolidation essentially means availing a new loan to pay off your existing loans. Usually, people take a personal loan at a lower interest rate (say 10% to 15% p.a.) to pay off another loan that incurs a higher rate of interest, such as a credit card loan (interest rate of 40% to 45% p.a.).

Many banks and NBFCs would grant you a personal loan of an amount up to ₹25 Lakhs for debt consolidation. The interest rate applicable on these debt consolidation loans is obviously higher than that for secured loans, but still much less than that applicable on credit cards. 

Although personal loans come with a higher rate of interest than many other types of loans (such as home loan, car loan, etc.), they can be really helpful in many cases. A personal loan can not only allow you to live the dream of a grand wedding ceremony but can also be a lifesaver in case of a medical emergency. It is one of the most versatile loan products in the market that you can use to fund a variety of your expenses.