- What are the benefits of Secured Loans that customers can enjoy?
- Know different types of Secured Loans such as Home Loan, Gold Loan, Loan Against Securities, and their benefits.
People take two types of loans – Unsecured (Personal Loan) and Secured (Home Loan, Gold Loan, Loan Against Securities such as Mutual Funds, Bonds, etc.) – to meet their needs and deal with financial emergencies. The basic difference between these two is the pledging of security or collateral. Customers don’t need to pledge anything in case of a personal loan, while secured loans cannot be given without any collateral. Lenders will have all the rights over your security until the loan is repaid fully. But there are several benefits of Secured Loans because of which they are so much popular among customers.
Talking about the benefits, the first and foremost is the wide range of choices among secured loans as we mentioned above. A customer can choose a suitable one according to his or her need and convenience. Other benefits include lower interest rates, higher borrowing amount, longer repayment tenure, flexible repayment options, faster processing, etc. Since there are several secured loans, it would be better to know about the respective benefits of each of them in detail. That’s why we will cover the benefits of all secured loans in this article. Keep reading to know more!
Different Kinds of Secured Loans and their Benefits
When we talk about Secured Loans, some of the most popular ones are Home Loan, Gold Loan, Loan Against Securities such as Fixed Deposits, Shares, Mutual Funds, Bonds, etc. We are showing all the benefits of them one by one. We are starting with a Home Loan. Please check out.
Benefits of Home Loans
Everybody wants to have their own home and if there is one product that helps buy the same, it’s a Home Loan. Lenders provide customized Home Loan amounts to people at affordable interest rates. The home loan amount can be repaid in fixed monthly installments. We are showing some of the important benefits of this loan below. Please check.
- The most amazing benefit of a Home Loan – Lower Interest Rates ranging from 7% to 9% per annum on average. However, rates tend to vary from one lender to another and also depend on a few important factors such as employment type, credit score, etc.
- Lenders give customers the option to choose a higher loan amount that ranges from 75% to 90% of the overall property value.
- Home loans are not restricted to just purchasing a house; it can be taken for other purposes too, such as Construction, Renovation, Extension, and Repair of homes, etc.
- Lenders also offer a Balance Transfer facility and Top-up on your existing Home Loan at affordable interest rates. Suppose you are paying higher interest rates and you need more money, you should first get a balance transfer done and apply for a top-up on it.
- Home Loan also helps people in saving tax as they can avail tax benefits upto INR 3.5 lakh (upto INR 1.5 lakh on Principal amount and upto INR 2 lakh on interest amount).
- Customers from Middle Income Group (MIG-1 and MIG-2) can also get a subsidy upto INR 2.35 lakh when they apply for a Home Loan via Pradhan Mantri Awas Yojana (PMAY). This will help them reduce their EMI amount and interest amount. The scheme will continue till March 31, 2021.
Home Loan Interest Rates of Top Lenders in India
|Lenders||Rate of Interest (In per annum)|
|State Bank of India (SBI)||9.15% - 11.30%|
|Axis Bank||8.75% - 9.15%|
|ICICI Bank||9.00% - 10.05%|
|Bank of Baroda||8.50% - 10.60%|
|LIC Housing Finance (LIC HFL)||8.50% - 10.75%|
|Tata Capital||8.95% - 12.00%|
|Indiabulls Housing Finance||9.30% Onwards|
|Bank of India||8.85% onwards|
|PNB Housing Finance (PNBHFL)||8.50% - 11.95%|
|Piramal Capital & Housing Finance (PCHF)||10.50% Onwards|
Benefits of Gold Loans
If we were to name one secured loan as popular as a Home Loan, it would surely be a Gold Loan. The reasons are many: Softer Eligibility Criteria, Lower Interest Rates, Quick Disbursal, Higher Loan Amount, Safety of your Gold, etc. With a Gold Loan, you can get the required sum of money against your gold ornaments or coins and fulfill any of your needs. Similar to a Home Loan, there are some prominent benefits of a Gold Loan that customers can enjoy. We are showing some of them below. Do check.
- The most amazing benefit of a Gold Loan is its secured nature due to which customers can get the loan amount at lower interest rates ranging from 10% to 16% per annum on average. However, it may vary from one lender to another. When rates are low, customers can easily pay the loan amount within the tenure.
- Talking about the Loan Amount, lenders provide maximum loan amounts ranging from 65% to 90% of the overall gold price. So, in times when gold prices are high, customers can get a higher loan amount as it is directly dependent on the gold price.
- Customers can take a gold loan against their gold ornaments for as many as times they like to. They only need to make sure to keep a good repayment track.
- Having a poor credit score and facing rejection from lenders? Well, Gold Loan can be a suitable option for you as lenders usually have lenient eligibility criteria due to its secured nature. Alongside this, customers can improve their credit score by paying the loan dues on time.
- Usually, lenders provide the option of EMI repayment in case of a loan. But in case of a Gold Loan, customers can enjoy more flexibility in repayment as they get four options – EMI Payment, Interest Payout at Regular Intervals, Bullet Repayment and Interest Payment at the end of tenure
Gold Loan Interest Rates of Top Lenders in India
|Gold Loan Lenders||Interest Rates (In Per Annum)|
|Muthoot Finance||12.00% - 27.00%|
|ICICI Bank||10.00% - 19.76%|
|HDFC Bank||9.50% - 17.55%|
|State Bank of India (SBI)||7.50%|
|Manappuram Finance||12.00% - 29.00%|
|Union Bank of India||7.00% - 9.60%|
|YES BANK||9.00% - 15.00%|
|Kotak Mahindra Bank||10.50% - 17.00%|
Benefits of Loans Against Securities
Other than a home loan and a gold loan, loans against securities such as Fixed Deposit, Shares, Mutual Funds, Life Insurance Policy, etc is also one of the popular secured loan options among customers. We are showing the benefits of all of them one by one. Please have a look.
Loan Against Life Insurance Policy
- The best thing about a loan against a life insurance policy is its affordable interest rates. You need to remember that interest rates depend on the premium of the policy that you already have paid and the number of times you have paid the premium.
- Individuals who have paid the premium for a greater period, interest rates will be lower. Usually, they range from 10% to 12% per annum.
- One of the important benefits of this secured loan is the loan amount as you can get a loan amount upto 80% to 90% of the total surrender value of your policy.
- The loan will be given in the form of an Overdraft Policy for 12 months so the interest will be charged only on the utilized amount.
- Lenders do less scrutiny as you are putting your life insurance policy as the collateral. Also, there are fewer chances of facing rejection from the lender.
Loan Against Fixed Deposits
Fixed Deposits are one of the popular banking products among customers and people deposit their hard-earned money to earn a higher rate of interest. But do you know that in times of financial crisis, you can get a loan amount against your fixed deposit from several banks and NBFCs? We are showing the benefits of Loan Against FD below.
- The interest rates on a Loan Against FD are generally 2-3% above the interest paid by the particular lender on your FD. Say, you are getting a 4% interest rate on your FD, the interest rate on your loan against FD will be somewhere between 6-7% per annum.
- Lenders also provide a loan amount upto 70-90% of the overall FD value, so you can get a higher loan amount according to your FD value.
- Customers will need to repay the loan amount against FD within the same tenure of your FD. So, if you have an FD for 5 years and you took a loan after 3 years, you will need to repay the loan within the remaining 2 years.
Loan Against Fixed Deposit Interest Rates of Top Lenders in India
We are showing interest rates on Loan Against FD given by top lenders in India. Do check them!
|Lenders||Interest Rates (In Per Annum)|
|Axis Bank||2% above the FD rate|
|SBI||1% above the FD rate|
|ICICI Bank||2-3% above the FD rate|
|HDFC Bank||2% above the FD rate|
|Bank of Baroda||10.60%-11.10%|
Loan Against Mutual Funds
If you need funds urgently, Loan Against Mutual Funds could also be a pretty good option for you. The reason: affordable interest rates, minimal documentation, etc. We are showing some of the benefits of the Loan Against Mutual Funds below. Please check them out.
- As your loan amount is backed by the mutual fund units, interest rates tend to be lower and usually range from 10-12% per annum. If you have an existing relationship with the lender and have a good credit score, interest rates could be much lower.
- The best thing about the loan against mutual funds is you will need to pay interest only on the withdrawn amount and not on the total loan amount.
- The loan amount will depend on the type of mutual fund against which you want the loan amount. For example, if you are taking a loan against Equity Mutual Fund, the loan amount will be upto 50% of the overall NAV. On the other hand, if it is against the Debt Mutual Fund, the loan amount can be upto 70-80% of the NAV.
|Axis Bank||10.50%-12.75% per annum|
|SBI||9.75% per annum|
|ICICI Bank||Depends on the investment value and market movement|
|HDFC Bank||Depends on the investment value and market movement|
|Bank of Baroda||7.35% - 8.10% per annum|
For staff 7.10% per annum