Hi! I'm Assetra — let's learn the loan basics! 👋
From loan types and terminology to eligibility, documentation and repayment — this guide walks you through the entire borrowing journey, written in plain language.
Each loan type is designed for a different purpose, with its own amount range, rate band and tenure.
Loan paperwork is full of jargon. Here's what the most common terms actually mean.
| Term | What it means |
|---|---|
| Principal | The original loan amount borrowed, before interest is added. |
| Interest Rate | The percentage charged annually on the principal for borrowing the money. |
| EMI | Equated Monthly Instalment — the fixed monthly payment covering both principal and interest. |
| Tenure | The total duration over which the loan is repaid. |
| Collateral | An asset pledged to secure the loan, which the lender can claim on default. |
| Processing Fee | A one-time charge by the lender for processing your loan application. |
| Foreclosure | Repaying the entire outstanding loan amount before the tenure ends. |
| CIBIL Score | A 300-900 credit score reflecting your repayment history and creditworthiness. |
| Amortization | The gradual repayment schedule that splits each EMI between interest and principal over time. |
| FOIR | Fixed Obligation to Income Ratio — the share of your income already committed to existing EMIs. |
| LTV Ratio | Loan-to-Value ratio — the loan amount expressed as a percentage of the asset's value. |
| Moratorium Period | A period during which the borrower isn't required to make repayments (common in education loans). |
Backed by collateral such as property, gold or a vehicle.
Approved purely on income and credit profile — no collateral needed.
| Aspect | Fixed Rate | Floating Rate |
|---|---|---|
| Rate movement | Stays the same for the chosen period | Moves with the market benchmark (repo/MCLR) |
| Predictability | High — EMI never changes | Lower — EMI can rise or fall |
| Best suited for | Borrowers who value certainty | Borrowers comfortable with some EMI variation for a potentially lower long-run cost |
| Typical starting rate | Slightly higher than floating | Usually lower at the start |
| Prepayment charges | May apply | Usually nil on floating-rate home loans (per RBI guidelines) |
Common factors across all loan types, plus the specific thresholds for each.
| Loan Type | Min Age | Min Income | Credit Score | Other Criteria |
|---|---|---|---|---|
| Personal | 21 yrs | ₹15,000/mo | 700+ | 2 yrs job stability |
| Home | 21 yrs | ₹25,000/mo | 700+ | Clear property title |
| Business | 23 yrs | ₹3L turnover/yr | 700+ | 2-3 yrs business vintage |
| Education | 16 yrs (co-applicant required) | Co-applicant income-based | 700+ (co-applicant) | Admission to recognised institute |
| Mortgage | 21 yrs | ₹25,000/mo | 700+ | FOIR ≤ 55%, LTV ≤ 70% |
Required for every loan type, regardless of purpose.
Compare rates, fees and tenure across lenders before applying.
Fill the application and upload KYC, income and (if applicable) collateral documents.
The lender verifies your details and issues a sanction letter with final terms.
Funds are disbursed and your EMI schedule begins — track everything online.
Equal monthly instalments for the entire tenure — the most common and predictable option.
Starts low and increases over time — suited to those expecting rising income.
Starts high and decreases — useful closer to retirement when income may reduce.
Interest paid periodically; the principal is repaid as one lump sum at the end.
Smaller regular EMIs with one large final instalment at tenure end.
Pay interest only on the amount utilised, with flexibility to deposit and withdraw.
Prepaying a portion of your loan, or foreclosing it entirely, can save significant interest over the remaining tenure — but it's worth checking the charges first.
| Loan Type | Lock-in | Foreclosure Charge |
|---|---|---|
| Personal | 6-12 months | 2-5% |
| Home (floating) | None | Nil |
| Home (fixed) | Varies | 2-4% |
| Business | 6-12 months | 2-4% |
| Vehicle | 6 months | 3-6% |
Moving your loan to a new lender with better terms can lower your EMI or shorten your tenure.
Your CIBIL score ranges from 300 to 900 and directly affects both approval odds and the interest rate you're offered.
| CIBIL Range | Tier | What it means |
|---|---|---|
| 300 – 549 | Poor | Approval unlikely without strong collateral or a co-applicant |
| 550 – 649 | Fair | Approval possible, but at higher interest rates |
| 650 – 749 | Good | Good approval odds with competitive rates |
| 750 – 900 | Excellent | Best rates, fastest approvals, highest loan amounts |
Talk to our experts or check your eligibility instantly with our free calculator.