Financial Education

Financial Security

Types of Credit based on repayment and interest options

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Financial education

Revolving Line of Credit
<ul>
<li>Credit limit set by the bank</li>
<li>Borrower can withdraw anytime within the limit</li>
<li>Interest charged only on the amount drawn</li>
<li>Monthly bill issued</li>
<li>Examples: Credit Cards, Other bank credit</li>
</ul>
Equated Monthly Instalments (EMI)
<ul>
<li>Full loan disbursed at the start</li>
<li>Fixed monthly repayment throughout the tenure</li>
<li>Repayment includes both principal and interest</li>
<li>Examples: Car Loans, Home Loans</li>
</ul>
Mandatory Interest, Flexible Principal Repayment
<ul>
<li>Full loan disbursed upfront</li>
<li>Interest paid regularly</li>
<li>Principal repaid at the end (in parts or full)</li>
<li>Can involve one or multiple borrowers</li>
<li>Examples: Loan against LIC Policies, Loan against Securities</li>
</ul>
Flat Rate Loans
<ul>
<li>Interest charged on original principal for entire tenure</li>
<li>Doesn&rsquo;t reduce with repayments</li>
<li>Examples: Personal Loans</li>
</ul>
Fixed Principal Repayment<img style="max-width: 100%; height: auto; float: right;" src="https://static.vikaspedia.in/mediastorage/filestorage/20250929142311_2.png" alt="Uploaded Image">
<ul>
<li>Fixed principal amount repaid periodically</li>
<li>Interest calculated on outstanding balance, reducing over time</li>
<li>Examples: Loan against Securities</li>
</ul>
Floating Rate Loans
<ul>
<li>Tenure and monthly payments fixed</li>
<li>Interest rate revised periodically</li>
<li>Examples: Home Loans</li>
</ul>
Loan Without Collateral
<ul>
<li>No security or guarantor required</li>
<li>Higher interest rates due to increased risk</li>
<li>Examples: Personal Loan, Credit Card Loan</li>
</ul>
Loan With Collateral
<ul>
<li>Backed by pledged security</li>
<li>Lower interest rates</li>
<li>Lender can recover amount from collateral if borrower defaults</li>
<li>Examples: Gold Loan</li>
</ul>

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