Retail Loans in India Explained: Types, Benefits, and Eligibility

A Retail loan is generally provided to an individual by a certified financial institution, a commercial bank or a credit union to purchase property, vehicles or other assets such as essential electronics, etc.Retail loans are provided to individuals with a decent credit score . Banks and financial institutions want to ensure timely repayment of such loans; hence having a good repayment history and credit score plays a very important role in availing a Retail loan. Interest is to be paid monthly or annually as per the pre-determined terms and conditions of the financial institution.People primarily opt for retail loans in case they want to make an immediate purchase but lack the funds to pay for it. One of the most common types of Retail loans is a housing loan . Buying a house is an expensive affair, and an average middle-class individual in India can barely afford to pay for a house in lumpsum. So, in such a case, the bank agrees to lend the amount, and the borrower agrees to pay the money back bit by bit along with the interest amount over a period of several years.

1.Housing loans:

Considering the fact that real estate is expensive, and it may take years for someone to save the amount of money required to purchase a house, a Housing Loan is the most commonly availed Retail loan in India.

2.Educational loans:

This type of loan is provided by banks to students who want to avail education but cannot afford to pay for the same. Students can use the loan money to pay for foreign education, tuition fees, hostel expenses and other similar expenses.

3.Vehicle loans:

For individuals looking to buy a new car or a two-wheeler, vehicle loans are provided by banks. You can choose to pay a part of the total purchase amount as down payment and the rest in instalments with interest. Interest amount may vary from bank to bank.

4.Personal loans:

A personal loan can be availed for a variety of reasons such as travelling, marriage, medical expenses or any such situation that may need immediate financial assistance.Retail loan industry is significantly benefiting the consumers by enabling them to purchase the necessary assets without paying in full at once. Banks nowadays have become cautious of who they are lending money to. Timely repayment is essential not only for the banks but also for the economy.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.