written by khatabook | November 28, 2022

A Brief Note on the Essential Facts On Retail Loans in India

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Retail loans are loans taken by individuals from banks or financial institutions for personal use. These loans can be used for various purposes, such as buying a car, paying for education, renovating a house, etc. Retail loans are generally unsecured, meaning they do not require any collateral. The interest rates on retail loans are usually higher than those on other types of loans because they are considered high-risk.

The middle class is the largest consumer of retail loans. The increase in the demand for retail loans has driven the loan market's growth in India.

Did You Know? Extension of credit is an important facet of the economy as it provides liquidity to the everyday consumer, which helps the economy grow.

Overview On Retail Loans

Loans are debt, so deciding to pursue one of these funding sources needs to be done carefully, with thought and responsible financial planning. Retail loan industry is significantly benefiting the consumers by enabling them to purchase the necessary assets without paying in full at once.

Also Read: Types of Loan - What are different Types of Loan in India?

Types of Retail Loans in India

There are various types of retail loans in India. Some of the popular retail loan products are as follows:

Personal Loan

Personal loan is an unsecured loan that individuals can avail of to meet their financial needs. A personal loan can be used for various purposes, such as funding a wedding, home improvement, medical treatment, travel, etc. Banks and financial institutions can obtain personal loans without providing any collateral. The interest rate on a personal loan is higher than that on secured loans such as home and car loans. The repayment tenure of a personal loan is shorter than that of secured loans.

Interest 

 7.90% p.a. and 49% p.a.

Home Loan

A home loan is a type of secured loan that individuals can avail for purchasing a house or flat. Home loans can also be availed for constructing a house or flat or renovating an existing house or flat. Banks and financial institutions can avail of a home loan by providing the property as collateral. The interest rate on a home loan is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of a home loan is longer than that of unsecured loans.

Interest 

 7.55% p.a

Car Loan

A car loan is a type of secured loan that individuals can avail of for purchasing a car. Banks and financial institutions can avail of a car loan by providing the car as collateral. The interest rate on car loans is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of a car loan is shorter than that of unsecured loans.

Interest 

4.33% for new cars and 8.62%

Education Loan

An education loan is a secured or unsecured loan that individuals can avail of for pursuing higher education in India or abroad. Education loans can be availed from banks and financial institutions by providing the education certificate as collateral. The interest rate on education loans is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of education loans is longer than that of unsecured loans

Interest 

 7.95% p.a. onwards

Loan Against Property

A loan against property is a type of secured loan that individuals can avail against their property, such as a house, flat, land, etc. Loans against property can be availed from banks and financial institutions by providing the property as collateral. The interest rate on loans against property is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of a loan against property is longer than that of unsecured loans.

Interest 

starts from 7.25% p.a

Loan against Shares

The interest rate on loans against shares is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of loans against shares is shorter than that of unsecured loans.

Interest 

9.50% to 12.00% p.a.

Loan against Fixed Deposit

The interest rate on loans against fixed deposits is lower than that on unsecured loans such as personal and credit card loans. The repayment tenure of loans against fixed deposits is shorter than that of unsecured loans.

Interest 

0.5% to 2% pa

Credit Card Loan

Credit card loans can be availed from banks and financial institutions without providing collateral. The interest rate on credit card loans is higher than on secured loans such as home and car loans. The repayment tenure of credit card loans is shorter than that of secured loans.

Interest 

12% p.a. to 29% p.a. (depending on the user's profile)

How To Get Retail Loans In India

The demand for retail loans has been increasing in recent years due to the growing number of aspirational middle-class families in India. 

1. Find a Financial Institution Offering Retail Loans

You can find a bank or financial institution that offers retail loans by searching online or by asking around.

2. Research About Loan's Interest Rates, Terms, And Conditions

It is important to research the loan's interest rates, terms, and conditions before applying for it. This will help you understand the loan better and make sure you can afford it.

The lender will determine the interest rate on loan, but it will typically be a few percentage points higher than the prime interest rate. The loan terms will vary depending on the lender, but it is typically a five-year loan with a fixed interest rate. The loan conditions will vary depending on the lender, but it usually requires collateral and a co-signer.

3. Apply Loan And Provide Required Credentials

Once you have found a bank or financial institution that offers retail loans, you can apply for the loan by filling out an application form and providing the required documents.

4. Approval For Loan

After you have applied for the loan, you will need to wait for the approval of the loan. Depending on the bank or financial institution, this can take a few days or weeks.

5. Repay Loan According To Terms And Conditions.

Once you have received the loan, you must repay it according to the terms and conditions. Make your payments on time to avoid any penalties or fees.

Also Read:  How to Apply for the Best Business Loan in India? - Types of Govt. Loan Schemes

Conclusion

Overall, retail loans in India can be a great way to finance big-ticket purchases or consolidate multiple debts. However, it is essential to compare different offers before signing up for one, as the interest rates can vary significantly. With some research, you can find a retail loan that meets your needs and helps you save money in the long run.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What are the documents required for availing of a retail loan in India?

Ans:

The documents required for availing of a retail loan in India vary from lender to lender. However, most lenders require the borrower to submit documents such as identity proof, address proof, income proof, etc.

Q: What is the repayment tenure for retail loans in India?

Ans:

The repayment tenure for retail loans in India varies from lender to lender. However, most lenders offer a repayment tenure of 5 to 7 years.

Q: What is the interest rate charged on retail loans in India?

Ans:

The interest rate charged on retail loans in India varies from lender to lender. However, the interest rates are generally higher as compared to other types of loans.

Q: What are the eligibility criteria for availing of a retail loan in India?

Ans:

The eligibility criteria for availing of a retail loan in India vary from lender to lender. However, most lenders require the borrower to be above the age of 18 years and should have a regular source of income.

Q: What are the different types of retail loans in India?

Ans:

There are various types of retail loans in India, which include personal loans, home loans, auto loans, education loans, etc.

Q: What is a retail loan?

Ans:

A retail loan is a loan that is provided by a financial institution to an individual for personal, family or household purposes.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.