Which type of loan is the cheapest?

The cheapest loans in India are secured loans like home loans. They come with low interest rates but the usage is restricted. For example, you can take a home loan only when you’re buying a home.

If you’re looking for loans for emergency cash use, then a Personal Loan or a Credit Card would be the cheapest loan in India. Both these are unsecured loans and are processed and disbursed quickly. They also come with competitive interest rates and convenient repayment terms.

There are so many ways to borrow money in India. Bank loans are the most sought after though. They are safe and cheap. Even in bank loans there are secured and unsecured loans. While home loans, car loans, and gold loans are secured loans, personal loans and credit card loans are unsecured loans.

Personal loan has diversified in recent years;

The personal loan market has grown massively in recent years. Lenders have taken advantage of the digital space and started offering online personal loans that are disbursed instantly. Two primary kinds of online personal loans available in the market are - Insta Loans & Pay Day Loans

There has also been a significant rise in the number of people who use credit cards;

Banks has largely decreased the minimum income requirement to get a credit card. Individuals with salary as low as Rs. 15,000 per month are able to get a credit card easily.

The cash advance feature of your credit card can come in handy in times of emergencies. But the interest rate may be a bit high on such cash advances. So it is better to pay off your credit card bills on time so that you don’t face an additional interest burden.

Key Takeaway: Before choosing the type of loan you want to apply to, ask yourself these question:

• How much money do I need?
• How soon do I need the money?
• What is my repayment plan?
• What kind of repayment tenure is suitable for me?
• Can the loan amount be used for any purposes or does it have a fixed end use? (like home loans)

You should choose the loan type based on the above responses.