GUIDESPERSONAL LOANS
How Many Types of Loans Are Available in India
Sources
Know more. All that you'll ever need to learn.
GUIDES
If you’re planning to buy a home, fund your higher education, start a business, or take care of unexpected expenses, you’ll likely explore different types of loans available in India.
So what loan should you choose?
This is the moment when most people realise that India’s lending system isn’t as straightforward as “secured vs unsecured.” Different banks, NBFCs, and digital lenders develop their loan products in distinct ways, and the same type of loan can behave differently depending on a borrower’s income range, credit history, and even the lender's internal approval workflow.
This comprehensive guide explains nine different types of loans, their features, benefits, interest considerations, and ideal use cases. You’ll also find a helpful comparison of secured vs. unsecured loans and how instant personal loan options work.
A loan is a financial agreement where a lender provides money upfront and the borrower repays it over time through EMIs or a lump‑sum payment. The interest rate applied to the loan depends on various factors, including the loan category, repayment tenure, borrower’s credit history, income stability, and whether the loan is secured or unsecured.
Every financial institution follows its own guidelines for evaluating eligibility, repayment structure, and loan approval criteria. Understanding the various types of loans helps you choose the right one for your needs.
Below are the most common types of loans offered across the country:
A home loan is a secured loan that allows you to purchase, construct, or renovate a residential or commercial property. Because property is offered as collateral, the interest rates tend to be lower and the tenure is typically much longer. Most lenders perform property valuations and legal checks before sanctioning a home loan, which is why the approval process can feel detailed but predictable.
Best for
Individuals looking to purchase a new home, construct a property, or refinance an existing loan.
A personal loan is an unsecured loan that can be used for multiple expenses such as medical needs, travel, weddings, or home interiors. Since no collateral is needed, lenders rely heavily on credit history, income stability, and existing liabilities to assess eligibility. Approval is usually faster than secured loans, especially through digital lenders.
Best for
Borrowers with a good credit score who need quick access to funds without restrictions.
Education loans support higher education, including undergraduate, postgraduate, or professional studies, either in India or abroad. Depending on the loan amount and the institution, these may be secured or unsecured.
Education loans cover tuition fees, living expenses, travel, books, and exam fees, which gives students and parents the ability to manage high‑value academic costs through planned EMIs.
These loans are often structured in a way that repayments begin after course completion, allowing students to enter the workforce before taking on EMI responsibilities.
Best for
Students aiming for undergraduate, postgraduate, or professional courses.
A vehicle loan is a secured loan used for purchasing a two‑wheeler, car, or commercial vehicle. Since the vehicle itself acts as collateral, the interest rates are usually competitive. The approval depends on the borrower’s income, credit history, and the value of the vehicle being financed.
Borrowers commonly choose vehicle loans when they want to spread the cost of purchase over time without compromising their savings. In many cases, lenders partner with dealerships, making the process smoother.
Best for
Individuals purchasing new or used vehicles.
Gold loans are one of the top choices in India because they offer fast access to funds against gold jewellery or coins. Since the loan is secured by gold, the documentation is minimal, and approval is quick. Borrowers often use gold loans during emergencies, festivals, or sudden financial needs.
The rate of interest cost tends to be lower than unsecured loans because the collateral reduces lender risk. Many borrowers appreciate that the gold remains safe with the institution and is returned once the loan is repaid.
Best for
Borrowers looking for quick liquidity during emergencies.
A loan against FD allows you to borrow money without breaking your FD. The FD continues earning interest while also serving as security for the loan. This type of loan is often used for short‑term cash needs because the approval process is quick and the interest cost is usually much lower than that of unsecured loans.
Borrowers who do not want to disturb long‑term savings but still need liquidity find this loan particularly helpful.
Best for
Individuals needing cash flow without disturbing long-term savings.
Credit card loans, also known as EMI conversions on credit card transactions, are unsecured loans available to existing cardholders. Since the lender already knows the borrower’s repayment behaviour, these loans are approved instantly for eligible customers.
They are generally short‑term and come with a higher interest rate compared to other lending options.
Best for
Small purchases, emergencies, or consolidating short-term debt.
A business loan manages your business’s working capital, expansion, inventory, or operational costs. These include secured loans and short-term business loans. Lenders assess revenue patterns, cash flow, business stability, and credit history when evaluating applications.
Startups and MSMEs often rely on business loans to stabilise operations or scale rapidly during growth phases.
Best for
Small businesses and startups needing immediate capital for growth.
Consumer durable loans help customers purchase electronics and home appliances such as televisions, laptops, mobile phones, and ACs.
Many retailers offer partnerships with lenders, allowing shoppers to buy products on low-interest or zero-interest payment plans. Because the ticket size is smaller, these loans appeal to cash-flow managers who want convenience without incurring significant upfront expenses.
Best for
Every day electronics, gadgets, and home appliance purchases.
Secured loans are backed by collateral such as property, vehicles, gold, or fixed deposits. They typically offer lower interest rates and higher loan amounts but carry the risk of asset loss if you fail to repay the loan.
Unsecured loans, on the other hand, do not require collateral and are approved based on your credit score and income. While they provide faster and simpler access to funds, the interest rates tend to be higher and the loan amounts lower.
Knowing the difference helps borrowers decide which loan structure aligns with the urgency, risk comfort, and repayment capacity of their situation.
Different loan types serve different financial goals. Your purpose is the first indicator, whether it is a home purchase, education, emergencies, business expansion, or regular spending.
Your credit score plays a significant role in determining the smoothness of your approval. Your preference between secured and unsecured loans depends on whether you are comfortable pledging an asset as collateral.
Your repayment capacity helps determine an EMI figure that you can manage comfortably without affecting your essential expenses.
When needs are immediate, unsecured options offer speed and simplicity. When the loan amount is large or the tenure is long, secured loans provide stability and lower cost.
If you are eligible, you can instantly check your loan amount through the Fi app and complete the entire process online, eliminating the need for paperwork or branch visits.
Borrowers appreciate that the charges from 8+ regulated lenders are clearly shown before applying, and the flexibility to choose the right loan amount makes the experience easy to manage.
This works exceptionally well for short‑term needs such as travel plans, medical requirements, or financial gaps that require quick resolution.
Tip: If you prefer a smooth experience over traditional, lengthy processes, try checking your instant loan eligibility through the Fi app.
India offers several types of loans to meet different financial needs, from buying a home to managing emergencies. Understanding the features of each loan type helps you make smarter financial decisions.
If you're exploring fast and flexible credit, you can explore loans on the Fi app and get instant access to funds from regulated entities like Federal Bank, LenDen, Fi Loans, etc., through the Fi app.
A home loan or vehicle loan is a common example of a secured loan since it requires collateral.
A gold loan or loan against fixed deposits is a secured option, while a personal loan or credit card loan is an unsecured one.
There are multiple types including home, personal, education, vehicle, gold, consumer durable, business loans, and more.
Yes, since there is no collateral, lenders typically charge a higher interest rate on unsecured loans.
You can check your eligibility for loans directly through the Fi app for instant approval and quick disbursal. The Fi app works with regulated entities, such as Fi Loans, to provide you with loan offers.
