Insurance Advisor

If you are planning to take a bank loan then should be clear about the type of loan you are going to take. This is to be done carefully as some of the loans which are easy to get asks for higher interest return. Here we shall look at different types of loans which are available from the banks.

The bank loans can be generally classified into four types. The first one is the secured loan. Here the borrower pledges some of his assets as security for loan. Usually property, ornaments, or vehicles are kept as collateral. Mortgage loan on property is the most common type of secured loan. The second type of bank loan is the unsecured loan. These loans are not secured against any assets of the borrower. Common types of unsecured loans are the credit card debt, bank overdraft, personal loans, corporate bonds, and credit facilities. The interest rates for such loans are usually high.

Then there is the demand bank loan. These are generally short-term loans for a period up to 3 months. They can be secured or unsecured. The interest rates are usually of the floating type. The borrower is needed to repay the loan when the bank demands to do so.

The fourth type of loan is the subsidized loan. These loans are generally with lower interest rates as it is subsidized by the government for different productive purposes. Education loans and agricultural loans come under this category.