{"id":7178,"date":"2023-01-05T18:19:56","date_gmt":"2023-01-05T18:19:56","guid":{"rendered":"https:\/\/rakshithpai.com\/?p=7178"},"modified":"2023-01-05T18:19:57","modified_gmt":"2023-01-05T18:19:57","slug":"types-of-personal-loan","status":"publish","type":"post","link":"https:\/\/rakshithpai.com\/types-of-personal-loan\/","title":{"rendered":"Five (5) Types Of Personal Loans And Their Feature You Must Know!"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-662db803ec123\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\" style='display:none' id=\"ez-toc-cssicon-toggle-item-662db803ec123\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Whats_A_Personal_Loan\" title=\"What\u2019s A Personal Loan?\">What\u2019s A Personal Loan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#How_do_Personal_Loans_work\" title=\"How do Personal Loans work?\">How do Personal Loans work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#What_Is_a_Personal_Loan_Used_For\" title=\"What Is a Personal Loan Used For?\">What Is a Personal Loan Used For?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#When_Is_a_Personal_Loan_a_Good_Idea\" title=\"When Is a Personal Loan a Good Idea?\">When Is a Personal Loan a Good Idea?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Five_5_Prominent_types_of_loans\" title=\"Five (5) Prominent types of loans:\">Five (5) Prominent types of loans:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Short-term_Loan\" title=\"Short-term Loan\">Short-term Loan<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Types_of_Short_term_loans\" title=\"Types of Short term loans:\">Types of Short term loans:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Tax_BenefitsDeductions\" title=\"Tax Benefits\/Deductions:\">Tax Benefits\/Deductions:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Loan_Against_an_Asset\" title=\"Loan Against an Asset\">Loan Against an Asset<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Tax_BenefitsDeductions-2\" title=\"Tax Benefits\/Deductions:\">Tax Benefits\/Deductions:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Credit_Card_Loan\" title=\"Credit Card Loan\">Credit Card Loan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Home_Loan\" title=\"Home Loan\">Home Loan<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Tax_BenefitsDeductions-3\" title=\"Tax Benefits\/Deductions:\">Tax Benefits\/Deductions:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Auto_Loans\" title=\"Auto Loans\">Auto Loans<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Tax_BenefitsDeductions-4\" title=\"Tax Benefits\/Deductions:\">Tax Benefits\/Deductions:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#For_More_Information_Check_this_Video\" title=\"For More Information, Check this Video:\">For More Information, Check this Video:<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/#Also_read\" title=\"Also read:\">Also read:<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Whats_A_Personal_Loan\"><\/span><strong>What\u2019s A Personal Loan?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Any time an individual takes out a loan to meet a specific personal financial need, such as funding an investment in a business, the loan is considered a personal loan<\/strong> (sometimes called a consumer loan).<\/p>\n\n\n\n<p>Personal loans may be used for a variety of purposes, with payback terms ranging from short-term to medium-term, and financing can occur quickly after approval. A personal loan might be useful whether you want to pay off high-interest debt, launch a business, or cover a large medical expenditure.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-1 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p>However, if you compare the costs of a personal loan to those of other forms of credit, you may find that they aren&#8217;t the most cost-effective choice. What you should do before considering applying for a personal loan is listed below.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_do_Personal_Loans_work\"><\/span><strong>How do Personal Loans work?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Getting a personal loan function similarly to getting any other type of loan.<strong> After reviewing your application and supporting documentation, the bank will evaluate your creditworthiness and provide you with a loan offer based on that.\u00a0<\/strong><\/p>\n\n\n\n<p>If you choose to accept the offer, the money will be deposited into your bank account, and you&#8217;ll be free to use it only for the purpose for which you&#8217;ve applied for the loan.<\/p>\n\n\n\n<p>There are certain loans that need not have any purpose. In such a case, you can use the money however you feel free to. But, please note that such loans are always high-cost loans. Meaning, the interest rates in most cases will be in double digits!<\/p>\n\n\n\n<p><strong>The loan must be paid back in equal monthly payments (EMI).<\/strong> The amount of each payment is based on the loan&#8217;s principal balance, the length of time it will be paid back, and the interest rate.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_a_Personal_Loan_Used_For\"><\/span><strong>What Is a Personal Loan Used For?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The money from a personal loan can be put toward whatever you&#8217;d like. Expenses include the following:<\/strong><\/p>\n\n\n\n<ol>\n<li>Medical Bills<\/li>\n\n\n\n<li>Education<\/li>\n\n\n\n<li>Shopping<\/li>\n\n\n\n<li>Petty expenses<\/li>\n\n\n\n<li>Others, etc.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_Is_a_Personal_Loan_a_Good_Idea\"><\/span><strong>When Is a Personal Loan a Good Idea?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>A personal loan can be used for anything you want, but that doesn&#8217;t mean you should. <\/strong>An individual should consider taking out a personal loan if doing so would improve their financial status or supply them with much-needed finances.<\/p>\n\n\n\n<p>If not, you should look at other borrowing options, such as low-interest credit cards, before committing to a personal loan. <strong>Personal loans are an option only in the following situations:<\/strong><\/p>\n\n\n\n<p>1. You don&#8217;t have a low-interest credit card and wouldn&#8217;t qualify for one.<\/p>\n\n\n\n<p>2. The amount you need to borrow now is more than what is available on your credit cards.<\/p>\n\n\n\n<p>3. You have no other option but to take a personal loan.<\/p>\n\n\n\n<p>4. There is no security that you can provide.<\/p>\n\n\n\n<p>5. If you need money for a limited time, a personal loan might be a good option. The standard term for a personal loan is between 12 and 60 months. But a loan within 3 to 6 months is preferred. The reason for this is the high cost of debt associated with a personal loan.<\/p>\n\n\n\n<p>6. A longer-term personal loan may be advantageous if you anticipate receiving additional funds in the future. For example, suppose you have a large sum of money coming to you in two years but not enough to cover your expenses until then.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-1024x683.jpg\" alt=\"5 Types of Loans and their Feature that you must know!\n\" class=\"wp-image-7182\" width=\"1200\" height=\"800\" srcset=\"https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-1024x683.jpg 1024w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-300x200.jpg 300w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-768x512.jpg 768w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-1536x1024.jpg 1536w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww-150x100.jpg 150w, https:\/\/rakshithpai.com\/wp-content\/uploads\/2023\/01\/lcphgxs7pww.jpg 1600w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Five_5_Prominent_types_of_loans\"><\/span><strong>Five (5) Prominent types of loans:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Short-term_Loan\"><\/span><strong>Short-term Loan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol><\/ol>\n\n\n\n<p><strong>A short-term loan is a loan taken out to meet an immediate monetary need, whether that obligation is temporary financial assistance for an individual or the running of a business.<\/strong> As with any form of borrowing, the loan&#8217;s principal plus interest must be paid back by the agreed-upon date, which is often less than a year after the loan was taken out.<\/p>\n\n\n\n<p>Payback on a short-term loan typically occurs within a short period of time, thus the name. <strong>It&#8217;s expected to be repaid in no more than 12 months.<\/strong> Any loan with a term that is longer than that is classified as a long-term or medium-term loan.<\/p>\n\n\n\n<p>Long-term loans have terms ranging from just over a year to over 30 years. There is no set deadline for repayment on certain short-term loans. It&#8217;s as simple as letting the debtor pay back the loan whenever they&#8217;re able to do so.<\/p>\n\n\n\n<p><strong>A short-term loan is the costliest form of a loan. Interest rates can range anywhere from 12% to 36% per year!<\/strong> That\u2019s messed up.<\/p>\n\n\n\n<p>I\u2019m sorry if any of you have taken such a loan. If you have, then please don\u2019t think of investing for now. There are very few assets that can give you over a 12 percent return on investment. I say this because your entire focus right now must be on repaying this loan, which is costing you more than 12% in interest.<\/p>\n\n\n\n<p><strong>Also, please be aware of &#8220;loan sharks.&#8221;<\/strong>\u00a0 It is illegal, but they are everywhere. To learn more about loan sharks, <a href=\"https:\/\/youtu.be\/lwkq1mmahq0\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><span style=\"text-decoration: underline;\">CLICK HERE!<\/span><\/strong><\/a><\/p>\n\n\n\n<p>Again, I&#8217;m saying, don\u2019t ever take a loan for discretionary expenditures. And if at all you need to take a loan, then do this.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Types_of_Short_term_loans\"><\/span><strong>Types of Short term loans:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ol>\n<li>Merchant Cash Advances<\/li>\n\n\n\n<li>Line of Credit<\/li>\n\n\n\n<li>Payday Loans<\/li>\n\n\n\n<li>Online or Installment loans<\/li>\n\n\n\n<li>Invoice financing<\/li>\n<\/ol>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_BenefitsDeductions\"><\/span><strong>Tax Benefits\/Deductions:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Short-term loans are loans under 12 months period. <strong>These loans are taken for meeting emergency cash requirements. <\/strong>So, You have no such tax benefits.\u00a0<\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-2 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Loan_Against_an_Asset\"><\/span><strong>Loan Against an Asset<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol start=\"2\"><\/ol>\n\n\n\n<p><strong>Loans are categorized in two forms.<\/strong><\/p>\n\n\n\n<ol>\n<li>Secured loan<\/li>\n\n\n\n<li>Unsecured loan<\/li>\n<\/ol>\n\n\n\n<p><strong>A loan against property (LAP) is a secured loan in which the borrower pledges either commercial or residential real estate, gold, silver, equity, debt instruments, etc. as collateral to the lender in exchange for a loan. <\/strong>Almost all assets that are valued correctly are eligible for &#8220;loans against property.&#8221;<\/p>\n\n\n\n<p>What&#8217;s the use of any asset if it&#8217;s not aiding us in these difficult times? Right?<\/p>\n\n\n\n<p>A loan against an asset is when you take a loan on your property, mutual fund units, bonds, provident funds, gold, etc. Usually, loans secured by assets have lower interest costs.<\/p>\n\n\n\n<p>Remember, suppose you pledge your asset as collateral for a loan. The loan amount could be 70 to 80% of the total asset price.<\/p>\n\n\n\n<p>For example, pledging gold worth Rs.1 lakh might give you cash of around 70 to 80k that\u2019s it.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_BenefitsDeductions-2\"><\/span><strong>Tax Benefits\/Deductions:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><strong>As per Section 24b, you can take a loan against property and claim a tax deduction of up to Rs. 2 lakhs.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Credit_Card_Loan\"><\/span><strong>Credit Card Loan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol start=\"3\"><\/ol>\n\n\n\n<p><strong>The maximum amount that can be charged to a credit card in a given billing cycle is known as the &#8220;credit limit.&#8221; <\/strong>However, most banks offer loans against credit cards, which can be useful if you need cash quickly and for a short period of time.<\/p>\n\n\n\n<p>You may use your available credit to borrow money, the details of such a loan are available alongside your credit card details. You&#8217;ll have access to your loan limit as soon as the bank authorizes your loan application.&nbsp;<\/p>\n\n\n\n<p><strong>All bank loans come with an interest rate that borrowers must pay back. This loan can be paid back over a certain period of time using Equated Monthly Installments (EMI).<\/strong><\/p>\n\n\n\n<p>Credit card loans are one of the fastest-growing personal loan segments in India. Mostly because of the 2000+ calls we get from our banks, right?<\/p>\n\n\n\n<p>For an introvert like me, only two types of people call us.<\/p>\n\n\n\n<ol>\n<li>Asking for a credit card<\/li>\n\n\n\n<li>The other one is asking for insurance.<\/li>\n<\/ol>\n\n\n\n<p>Anyway, <strong>a credit card is costly; the interest cost is around 24% to as much as 48% per annum.<\/strong><\/p>\n\n\n\n<p>Usually, credit card interest charges are based on the MPR, which stands for the monthly percentage rate. Multiply this rate by 12, and you\u2019ll know what your interest rate on a credit card is.<\/p>\n\n\n\n<p><strong>The Indian credit card industry is expanding at a rate of more than 20% per year.<\/strong> As of 2021, total spending is estimated to be around Rs 11,500 crore.<\/p>\n\n\n\n<p>Even in this case, since credit card spending is considered a luxury item, you won\u2019t get any tax benefits. In fact,<strong> if you are paying credit card bills of over Rs 1 lakh, you are likely to receive a notice from the IT department.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Home_Loan\"><\/span><strong>Home Loan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Home loans are secured loans used to finance the acquisition of a real estate by using the property as collateral. <\/strong>Home loans provide access to large sums of money at low rates of interest and for extended periods of time. They are paid back in monthly installments. The title to the property is handed over to the borrower once all payments are made.<\/p>\n\n\n\n<p><strong>If the borrower can&#8217;t pay back the loan, the lender has the right to foreclose on the property and sell it to get the money back.<\/strong><\/p>\n\n\n\n<p>Hence, a home loan is a loan taken out with a bank or other lending organization in order to finance the purchase of a home. Both the interest rate and the conditions of repayment on a mortgage can be changed over the loan&#8217;s life.<\/p>\n\n\n\n<p>Did you know that India\u2019s personal loan market is worth over Rs. 37,700 crores? Out of which, almost 50% of the loan is a housing loan amounting to Rs. 18,250 crores.<\/p>\n\n\n\n<p>And that\u2019s because we Indians give a lot of consideration to owning a house. Right?&nbsp;<\/p>\n\n\n\n<p>Now, <strong>typically speaking, a housing loan is one of the cheapest forms of personal loan. <\/strong>wherein your interest cost is around 6\u201310% and over, depending on your credit score, loan amount, loan period, etc.<\/p>\n\n\n\n<p>Nowadays, you can get a home loan to buy a fully-built house or even to start from scratch. You can even get loans for repair and renovation costs.<\/p>\n\n\n\n<p>Usually, housing loans are for periods exceeding 10 years and can be for as long as 30 years.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_BenefitsDeductions-3\"><\/span><strong>Tax Benefits\/Deductions:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ol>\n<li>You can claim up to Rs. 2 lakhs and another Rs. 30,000 under Section 24.<\/li>\n\n\n\n<li>80-C deductions on the principal portion up to Rs. 1.5 lakhs<\/li>\n\n\n\n<li>Additional loan interest is deductible under 80 EEA up to Rs. 1.5 lakh if you took out the loan between April 2019 and March 2022.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Auto_Loans\"><\/span><strong>Auto Loans<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Personal two- and four-wheeled vehicles can be financed through a vehicle loan. <\/strong>In most cases, a lender will loan the money (making a direct payment to the dealer on the buyer&#8217;s behalf), and the buyer will return the loan in equated monthly installments (EMIs) over a certain period of time and at a certain interest rate.<\/p>\n\n\n\n<p><strong>Auto loans are one of the fastest-growing personal loan segments in India, with a growth rate of 20% per annum. <\/strong>I don\u2019t know what we&#8217;ll do with so many cars on the road. I mean, think of metropolitan cities. There\u2019s no place for parking. It has become a big issue now.<\/p>\n\n\n\n<p>Anyway, your car loan is kind of costly. because your car is costly. Did you know that when you buy a car, you pay anywhere from 29-30 to nearly 43 percent in taxes, cess charges, and other fees? Whereas for an Electric vehicle, you\u2019ll pay 12% GST, but there are other ways to bear the cost.<\/p>\n\n\n\n<p><strong>Car loans are available at around 8 to 10 percent interest, and if you default on the loan, they\u2019ve every right to take your car. <\/strong>Also, since a car is a liability, subscribing to debt to take on liability is not a suggested option unless owning a car makes your life easier. I mean, unless absolutely necessary, avoid taking out a vehicle loan.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax_BenefitsDeductions-4\"><\/span><strong>Tax Benefits\/Deductions:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Since a car is a luxury item in India, there are no tax breaks for people who buy one for personal use.<\/p>\n\n\n\n<p>However, if you own an electric vehicle, you can deduct interest costs up to Rs. 1.5 lakh under Section 80EEB.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Any time an individual takes out a loan to meet a specific personal financial need, such as funding an investment in a business, the loan is considered a personal loan (sometimes called a consumer loan). <\/strong>There are three features shared by all personal loans: Debt documentation (promissory note) A borrowed sum (principal)<\/p>\n\n\n\n<p>All the loans mentioned are for personal consumption only. You can get additional tax breaks and other benefits if you take out a business loan instead of a personal one. And for that, the loan you are taking on, like the asset, must be in the name of the business.&nbsp;<\/p>\n\n\n\n<p><strong>Also, the rates mentioned in this article can change based on your credit score, your loan period, and the amount of the loan.<\/strong><\/p>\n\n\n\n<div class=\"wp-block-buttons is-horizontal is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-3 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link has-text-color has-background wp-element-button\" href=\"https:\/\/zerodha.com\/open-account?c=PR4768\" style=\"border-radius:50px;color:#0f0027;background-color:#e4fa00\" rel=\"nofollow\"><strong>Open Zerodha Account Now!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_More_Information_Check_this_Video\"><\/span><strong>For More Information, Check this Video:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe loading=\"lazy\" title=\"Five (5) Types of PERSONAL LOANS &amp; Their Feature That You Must Know! #personalloan #personalfinance\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/Cwq10mp9vgc?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<p><strong>Disclaimer: <\/strong>All the information on this website is published in good faith and for general information purposes only.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Also_read\"><\/span><strong>Also read:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/rakshithpai.com\/invest-1-lakh-earn-18-crores\/\" target=\"_blank\" rel=\"noreferrer noopener\">Invest Rs. 1 Lakh to Earn 18 crores in Retirement!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/set-up-education-fund\/\" target=\"_blank\" rel=\"noreferrer noopener\">Set up kids&#8217; higher education with just Rs. 100\/day!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/equity-investing-approach\/\" target=\"_blank\" rel=\"noreferrer noopener\">Best Way to Invest in Equity Market!<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/beginner-trader-tips\/\" target=\"_blank\" rel=\"noreferrer noopener\">10 Tips for Beginner Traders:<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/rakshithpai.com\/sectoral-allocation-market-correction\/\" target=\"_blank\" rel=\"noreferrer noopener\">Sectoral Allocation Contributes to Market Correction!<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>What\u2019s A Personal Loan? Any time an individual takes out a loan to meet a specific personal financial need, such as funding an investment in a business, the loan is considered a personal loan (sometimes called a consumer loan). 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Personal Loans And Their Feature You Must Know! -<\/title>\n<meta name=\"description\" content=\"Any time an individual takes out a loan to meet a specific personal financial need, such as funding an investment in a business, the loan is considered a personal loan (sometimes called a consumer loan). Personal loans may be used for a variety of purposes, with payback terms ranging from short-term to medium-term, and financing can occur quickly after approval. A personal loan might be useful whether you want to pay off high-interest debt, launch a business, or cover a large medical expenditure.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/rakshithpai.com\/types-of-personal-loan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Five (5) Types Of Personal Loans And Their Feature You Must Know! -\" \/>\n<meta property=\"og:description\" content=\"Any time an individual takes out a loan to meet a specific personal financial need, such as funding an investment in a business, the loan is considered a personal loan (sometimes called a consumer loan). Personal loans may be used for a variety of purposes, with payback terms ranging from short-term to medium-term, and financing can occur quickly after approval. 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