Generally there are two types of Loans-
Secure Loans –
Secure Loans are Loans on which we pledge our Properties or Financial Assets.
Example: Home Loan, Car loan, LAS & LAP (Loan against securities like Shares, Mutual Funds, Fixed Deposits, Gold, Bonds, Insurance policies) and Loan against Property is via Mortgage of property.
Loans in which we give securities are treated as Good Loans.
If our CIBIL score is good we can negotiate the rate of Loan.
Home Loan & Car Loan are treated as good loans . Because on Home Loans we also get tax benefits under 80 C & Interest benefit up to 2 lakh.
And for our Car loan businessman & Professional can show expenses in books.
As per the Financial Planners, Loans on which we give securities are called as a Good Loans. They are Suggesting you to take loans only when you are creating any Asset.
Unsecured Loans –
Unsecured Loans are Loans against whom no securities are given….. like Personal Loans,credit card loan.
Example, loans for TV, Fridge, gadgets like Mobile, Laptop etc. for which Rates are too high.
(Beware: They confuse us between absolute & CAGR calculations)
Mainly, these loans are for consumption purpose and not for creating assets.
So Loans without security are called as a Bad Loans.
Additional Tip –
Total EMI ( Secured + Unsecured) should not be more than 30% of your income and as age increases, loan should be reduced.
Prefer to be loan free when you are near retirement age.