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Loans / Types of loans: overview
Topic 02 of 19

Types of loans: overview

Law as on 2026-10-29 Next review 2027-04-29 Applies to banks · NBFCs · HFCs · co-operative banks · digital lenders · all REs

Every retail and business borrowing arrangement in India falls under a distinct legal structure. While an unsecured personal loan depends solely on contract and personal liability, a vehicle loan creates an enforceable hypothecation under the Indian Contract Act, and a gold loan relies on a formal pledge. The rules governing interest calculation, repossession, security enforcement, and closure differ sharply across these categories.

This section provides a practical guide to the principal loan types available to Indian borrowers, explaining the legal framework governing each instrument, the mandatory consumer protections applicable, and what lenders can and cannot do upon default. Detailed legal treatments of property-backed and commercial facilities are covered in dedicated standalone sections.

What this topic covers

01 BNPL and digital loans: regulatory framework and borrower protections Buy Now Pay Later (BNPL) and digital app-based loans are short-term credit arrangements governed by the Reserve Bank of India's d… Read → 02 Business, MSME and working capital loans: legal overview Business loans finance enterprise operations through working capital facilities (Cash Credit, Overdraft, Letter of Credit) or lon… Read → 03 Credit cards: RBI issuance rules, billing disputes, and cardholder rights A credit card provides a revolving unsecured credit facility governed by the Reserve Bank of India (Credit Card and Debit Card – … Read → 04 Education loans: IBA model terms, collateral limits, and student rights An education loan is a specialised facility designed to finance higher education in India or abroad, with repayment structured ar… Read → 05 Gold loans: pledge rules, 75% LTV cap, and auction safeguards A gold loan is a secured loan founded on the law of pledge under the Indian Contract Act, 1872. You deliver physical gold ornamen… Read → 06 Home loans and loan against property: legal overview Home loans and Loans Against Property (LAP) are secured lending arrangements backed by a mortgage over immovable property under t… Read → 07 Personal loans: rules, costs, and borrower rights A personal loan is an unsecured facility, meaning the lender takes no collateral such as a house, vehicle, or jewellery. Your lia… Read → 08 Vehicle loans and repossession law in India A vehicle loan is a secured loan created through a contract of hypothecation. The borrower remains the registered owner and retai… Read →

Sources

  1. Reserve Bank of India, Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, rbi.org.in, accessed 29 October 2026.
  2. Indian Banks' Association, Model Educational Loan Scheme for Pursuing Higher Education in India and Abroad, iba.org.in, accessed 29 October 2026.