Taking loan has become a common thing in today's time, there are many loan options available in the market. But do you know that there are mainly three types of loans? People take home loan, car loan, gold loan, personal loan as per their need. Every loan has its own specialty, interest rate, duration, and conditions. By the way, home loan is taken to buy property or build a house, car loan is taken to buy a vehicle, in gold loan you get instant cash in exchange of your gold. So let's know about these three loans.

There are different occasions in life when we suddenly need money. Children's education, dream of a house, medical emergency or any other big expense suddenly comes upon us. In such a situation, a loan comes as a straw to hold on to for everyone. But in today's time, there are so many loan options that the common man gets confused. Well, today we will understand the difference between the three most popular loans - home loan, personal loan and gold loan, their advantages, disadvantages and interest rates. So that it becomes much easier for you to take a loan.

Home loan is taken to buy a new house, to get it built or to renovate an old house. Usually, its interest rate is lower than personal or gold loan (because the house is mortgaged), around 8% to 12% per annum. Well, you can get a loan of 75% to 90% of your property value. Home loan has the longest tenure (from 5 to 30 years), due to which the EMI remains low. Take this loan when you want to buy or get a house built and you are able to pay EMI for a long period.

Personal loans are often taken for any personal need such as marriage, medical expenses, travelling, paying off debts etc. In personal loans, you may be charged interest of about 10% to 24% per annum or even more. This loan depends on your income and credit score. This loan with a short term (1 to 5 years) can range from a few thousand to 40-50 lakhs. However, before taking a personal loan, do keep the interest rate in mind.

By the way, gold loans are also taken to meet any immediate financial need. However, the interest rate of gold loan can be less than personal loan and slightly more than home loan, it can be around 9% to 18% per annum. Its time is very short (from a few months to 2-3 years). This loan is available at the time of need by pledging your gold (jewellery, coins, biscuits) with the bank/NBFC.

By the way, home loans have the lowest interest rate, because it is a long term secured loan. On the other hand, the interest rate in gold loan is more than home loan but less than personal loan, because gold is mortgaged. Talking about personal loan, it has the highest interest rate, because it is available without any security (unsecured), so the risk of the bank is more. However, if you are taking any of these three loans, then apart from the interest rate, do not forget to keep in mind the processing fee, documentation charge, pre-payment charge etc.

Before taking any loan, make it clear to yourself why the money is needed and how much money you need. In how much time can you repay the loan you are taking? Apart from this, do you have anything to mortgage? And also how is your credit score? Always remember that a wrong decision taken in haste can trap you in the debt trap.

Always remember that you should not take a loan just by looking at the offer or by imitating others. Taking a loan beyond your capacity can put you in trouble. Before taking any loan, apart from the interest rate, understand the cessing fees, other charges and terms. Before taking a loan from any bank or NBFC, do thorough research, compare various options and if needed, take the help of a financial advisor.