A loan is a financial agreement in which one party (the lender) provides money or resources to another party (the borrower) with the expectation that the borrower will repay the loan, typically with interest, over a specified period. Loans are commonly used for various purposes, including buying a home, starting a business, paying for education, or covering other expenses.
| Sl. No | Loan App | Interest Rate |
|---|---|---|
| 1 | Moneyview | 10% p.a. onwards |
| 2 | MoneyTap | 12% p.a. onwards |
| 3 | KreditBee | 17.00% – 29.95% p.a. |
| 4 | PaySense | 14% – 36% p.a. |
| 5 | CASHe | 2.50% p.m. onwards |
| 6 | Nira Finance | 2% p.m. onwards |
| 7 | Navi | 9.9% p.a. onwards |
| 8 | Fibe (Formerly EarlySalary) | 12% p.a. onwards |
| 9 | LoanTap | 12% – 24% p.a. |
| 10 | mPokket | Up to 48% p.a. |
| 11 | Bajaj Finserv | 11% – 35% p.a. |
| 12 | IDFC First Bank | 10.99% p.a. onwards |
| 13 | ZestMoney | 14% onwards |
| 14 | True Balance | 2.40% p.m. onwards |
| 15 | Home Credit | 1.60% p.m. onwards |
| 16 | Olyv (SmartCoin) | 18% – 30% p.a. |
| 17 | FlexSalary | 18% – 54% p.a. |
| 18 | Payme India | 1.50% p.m. onwards |
| 19 | StashFin | 11.99% onwards |
| 20 | Dhani | 13.99% p.a. onwards |
| 21 | IndiaLends | 10.75% onwards |
| 22 | Buddy Loan | 11.99% p.a. onwards |
| 23 | Upwards by LendingKart | 18% – 32% p.a. |
| 24 | RupeeRedee | 30% p.a. onwards |
| 25 | SMFG India Credit (Fullerton) | 13% onwards |
| 26 | LazyPay | 15% – 32% p.a. |
| 27 | Hero FinCorp | 21% p.a. onwards |
| 28 | Kissht | 14% p.a. onwards |
| 29 | Pocketly | 24% – 36% p.a. |
| 30 | Finnable | 16% p.a. onwards |
A loan is a financial agreement in which one party (the lender) provides money or resources to another party (the borrower) with the expectation that the borrower will repay the loan, typically with interest, over a specified period. Loans are commonly used for various purposes, including buying a home, starting a business, paying for education, or covering other expenses.
Key components of a loan include:
- Principal: The amount of money initially borrowed.
- Interest: The cost of borrowing money, usually expressed as a percentage of the principal. The borrower pays this in addition to repaying the principal.
- Loan term: The duration over which the loan is to be repaid.
- Repayment schedule: The timeline and frequency of payments (monthly, annually, etc.).
- Collateral (if any): Some loans are “secured,” meaning the borrower must provide an asset (such as property or a car) as collateral. If the borrower defaults, the lender can claim the collateral.
- Unsecured loans: These are loans that do not require collateral, like credit cards or personal loans, but they often come with higher interest rates.
Loans are offered by banks, credit unions, government programs, and other financial institutions.
Taking out a loan can provide access to needed funds, but there are several potential disadvantages to be aware of:
1. Debt Burden
- Borrowers must repay the loan amount (principal) plus interest. This creates a financial obligation that may limit future financial flexibility.
2. Interest Costs
- Interest rates on loans can be high, especially for unsecured loans (like credit cards or personal loans). This can significantly increase the total amount repaid over time.
3. Risk of Default
- If a borrower is unable to repay the loan, it can lead to severe consequences, including damage to credit scores, legal action, or loss of collateral (in the case of secured loans).
4. Impact on Credit Score
- Missing payments or defaulting on a loan can negatively impact your credit score, making it harder or more expensive to borrow in the future.
5. Collateral Risk (for Secured Loans)
- Secured loans, like mortgages or car loans, require collateral. If you fail to make payments, the lender can seize the collateral (e.g., your home or car).
6. Fees and Penalties
- Many loans come with fees, such as origination fees, late payment fees, or prepayment penalties (if you pay off the loan early).
7. Debt Cycle Risk
- Borrowers may fall into a cycle of taking on new loans to repay old ones, especially if they rely on high-interest loans or credit cards. This can lead to mounting debt and financial strain.
8. Potential for Overborrowing
- Easy access to loans can encourage overborrowing, where individuals or businesses take on more debt than they can comfortably repay, leading to financial difficulties.
9. Long-Term Financial Pressure
- Some loans, like mortgages or student loans, may take decades to repay. This long-term financial commitment can limit savings, investments, and other financial goals.
While loans can be beneficial in certain circumstances, understanding these disadvantages helps borrowers make more informed financial decisions.
