Confused Between Loan Options? This Simple Guide Will Help You Choose
Your daughter's college admission letter just arrived. You know you need funds quickly, but the sheer number of loan options confuses you. Each comes with its conditions, paperwork, and waiting times, and you can't waste time getting lost in comparisons.
In such scenarios, you need a loan option that requires paperless documentation, quick approval, and the flexibility to use the funds for almost any purpose. In this guide, we'll help you understand which loan might be the right choice in such urgent scenarios.
Why Picking the Right Loan Matters
Selecting a loan without understanding its terms may not work in your favour. You could end up with something that does not fit, and you'll regret it later.
What you must consider -
- Affordability - Check all: Interest rates, hidden charges, processing fees, or terms may increase your overall cost
- Collateral requirement - If you need to mortgage or pledge any asset as security
- Flexibility - Some loans allow for prepayment or partial payment without penalties
- Speed - The waiting times for approval can make or break your plans. Digital apps often offer faster approvals than traditional methods
Two Broad Loan Categories Available
We have listed the loan options available in India. Go through them all and pick a flexible option that meets your needs -
1. Secured Loans
Loans that require you to pledge collateral are secured loans. For instance, home loans, loans against property, etc.
If you default, the lender can recover the dues by claiming your asset. To fund your daughter's college fee, you can get a loan against property.
Loan Against Property
A loan against property allows you to borrow a large amount at comparatively lower interest rates. You can easily cover tuition, hostel, and other education-related costs without disrupting your savings.
But it requires detailed paperwork, and lenders take a longer time to approve as it takes time to assess the property value.
Pros
- Come with lower interest charges
- Offer higher loan amounts
- Come with longer repayment tenures
Cons
- May have a risk of losing your asset
- Tedious application process
- Requires a lot of documentation and a longer approval process
2. Unsecured Loans
Unsecured loans do not require collateral and can be used to pay for any financial need.
One of the key features that differentiates secured and unsecured loans is purpose.
Secured loan amounts should be used for the purpose for which they were applied for. For example, a home loan can only be used to buy a home. Unsecured loans like personal loans can be used for any purpose, even for home renovation.
Personal Loan
A personal loan is an unsecured loan that you can use to pay for urgent financial emergencies. It can be used for paying wedding expenses, existing debt, medical bills, college fees, home renovation expenses, vacation costs, and more.
Key Features
- Offers flexibility, and you don't have to pledge anything
- Use a personal loan App to access instant checks of eligibility and paperless processing
- Loan amount ranges between ₹50,000 to ₹5,00,000 depending on the borrower's income, existing debt, credit rating, and the lender's policy
- Tenure ranges between 12 and 36 months. Shorter tenure ensures higher EMIs but lower interest
Other Examples
- Business loans help you fund expansion, purchase machinery, pay salaries, or ease cash flow
- Instant Cash loans are short-term, collateral-free loans to manage emergency or low-ticket expenditures
- Salary Advance loans let salaried individuals borrow a whole or some amount of loan in advance to support mid-month or urgent financial needs, such as a sudden medical expense or urgent travel
Pros
- Can be used for any purposes - no restrictions
- Quick eligibility check, instant approval, and disbursal
- No need for intermediaries, and it can be applied online within minutes
- No risk of losing collateral
- Paperless process
Cons
- Come with higher interest charges
- Suitable for low-ticket expenses of up to ₹5,00,000
Winner - For paying your daughter's college admission fee, a collateral-free loan, such as a personal loan, is a better option because it offers instant access to funds. Hero FinCorp offers a paperless personal loan application process so you can focus on what truly matters, her future. Check out how much installments you have to pay every month using our online personal loan EMI calculator to manage your finances stress free.
Tips for a Hassle-Free Loan Experience
- Use safe online portals
- Keep documents within reach
- Do your credit check first
- Borrow what you need
- Always understand loan terms before signing
Also Read - I'm New To Credit – Which Loan Should I Take First?
Find the Best Match Today
When it comes to something as important as your daughter's college admission fee, a personal loan is one of the most convenient ways to arrange funds without added stress. It gives you the flexibility to manage expenses without touching your savings.
With Hero FinCorp, you also get quick approvals and a fully digital and paperless process that makes financing simpler. Ready to take the next step? Apply for a personal loan today and secure her future with ease.
Frequently Asked Questions
1. Can I access multiple types of loans through a single app?
Yes, most modern platforms, like Hero FinCorp's, show multiple types like personal, business, flexi, and quick loans on a single app.
2. Is the quick loan more expensive than a personal loan?
Usually, yes, as short-term loans tend to be more expensive with increased interest due to their shorter tenure, higher risk, and faster disbursement.
3. How do I select between a business loan and a personal loan?
If the funds are for your business, avail of a business loan. For expenses on a personal front, opt for a personal loan. Also, keep in mind that the documentation process, approval, and disbursement of personal loans are much quicker than business loans.
