Various Loan Options Provided by Indian Banks
Understanding Secured Loans in India
Secured loans are a popular financial tool in India, offering lower interest rates and higher borrowing limits compared to unsecured loans. These loans require collateral, such as a house, car, or financial securities, to secure the loan. Here's a breakdown of some common secured loans available in India.
Loan Against Securities (LAS)
This loan allows you to pledge financial securities like life insurance policies, mutual funds, shares, bonds, and more as collateral. Approved securities include demat shares, equity shares, exchange-traded funds (ETFs), and more. To be eligible, you need to hold approved securities listed by the lender and comply with KYC norms. One instrument is sufficient if it is eligible. The loan amount depends on the value of the securities and is subject to flexible terms.
Loan Against Property (LAP)
This loan is secured by residential or commercial property owned by the borrower. It can be used for personal or business needs. Eligibility criteria include individuals aged 18 to 75 years who own property in urban/metro/semi-urban areas. Properties must be freehold, and all co-owners must jointly apply if applicable. The loan amount and tenure vary, with minimum Rs 5 lakh and maximum up to Rs 10 crore for residents, and tenure up to 15 years or till the borrower turns 75 years. The loan-to-value (LTV) ratio is usually around 50% of the property value.
Loan Against Shares
This loan is specifically backed by pledged listed equity shares. Borrowers continue to hold these shares while availing the loan. Eligibility criteria include an age between 18 and 90 years, salaried/self-employed/business owner, and holding approved listed shares. Generally, no credit score (CIBIL) requirement is needed, but valid PAN and Aadhaar are necessary. Income may be checked for large loans.
In addition to these, other secured loans in India include home loans, gold loans, vehicle loans, loan against property, loan against PF/EPF, and loan against FD.
While credit score is less crucial for loans against securities and shares, it plays a vital role in unsecured personal loans, and GST rules emphasize credit scores for approval and interest rates. Standard documents like identity proof, address proof, income proof (if applicable), and ownership proofs are mandatory for all loans.
Each lender sets specific guidelines, but these general structures and eligibility criteria prevail in India’s secured loan market. For a loan against security, the applicant should be a resident of India, and the age should be at least 21 years. The bank should approve the security against which the loan is being availed.
[1]: Source 1 [2]: Source 2 [3]: Source 3 [4]: Source 4 [5]: Source 5
- Debt funds, such as Loan Against Securities (LAS), can provide higher borrowing limits due to their secured nature.
- An EMi calculator can help determine the monthly installments for a loan against mutual funds.
- Fixed deposits can be used as collateral for Loan Against FD, providing access to funds when needed.
- Equity funds, along with shares and bonds, can serve as collateral for Loan Against Securities (LAS) in India.
- A high credit score is beneficial for unsecured personal loans, while secured loans like Loan Against Shares or Loan Against Property (LAP) may require minimal credit checks.
- home-and-garden, business, and personal-finance websites can offer tips and advice on managing secured loans and improving financial lifestyle.
- Banking-and-insurance companies provide various secured loans in India, including home loans, gold loans, vehicle loans, Loan Against Property (LAP), and Loan Against Shares.
