SBI loan: definition, types, features, benefits, eligibility criteria and interest rate

SBI loan is a sum of money a person or a company borrows from the State Bank of India (SBI) and agrees to pay it back at a particular rate of interest within a particular time. SBI, being the primary and the largest financial institution of India offers several types of loans to its customers to meet their diverse needs.

The types of loans offered bythe State Bank of India (SBI) include secured and unsecured loans. To get a secured loan, a borrower has to offer collateral or security to the bank or financial institution whereas an unsecured loan does not need collateral.

The features of SBI loans include no prepayment penalty, Interest on daily reducing balance, low processing fee, attractive interest rates, and many more.

The eligibility criteria to get a SBI loan include a good credit history, age between 21 to 58 years,and financial stability.

The interest rate on SBI loans ranges between 7.25% to 14.60% p.a. and depends on the applicant’s credit score, loan type, and scheme.

What is an SBI loan?

An SBI loan is a financial agreement between a borrower and the State Bank of India (SBI) whereby a borrower is given money on the condition that it must be repaid with interest during the specified period of time.

There are two primary types of loans offered by the State Bank of India (SBI) including secured loans and unsecured loans. Home loans, Loan Against Property (LAP), auto loans, gold loans, loans against fixed deposits, and secured lines of credit are included in secured loans whereas personal loans, credit card loans, medical loans, consolidation loans, and business loans are included in unsecured loans.

What are the types of loans offered by SBI?

The types of loans offered by SBI are divided into two categories i.e., secured loans and unsecured loans, which have differences in features, benefits, and requirements. The State Bank of India provides various types of secured and unsecured loans to meet the needs of its customers.

1. SBI secured loans

A secured loan is a type of loan in which an asset, such as a house, car, gold, stocks, bonds, or other tangible assets, is used as collateral to secure the loan.

In a secured loan, the lender has the right to sell the collateral to recover the loan in case the borrower fails to repay the loan.

Now, you are also able to use insurance as collateral after obtaining a certificate of insurance from the insurance provider, according to the article titled, “World Oral Health Day: How insurance can serve as collateral for secured loans?” published on LiveMint. However, to use insurance as a loan collateral, the insurance policy must have a cash value or surrender value.

The secured loans usually have lower interest rates, longer tenure, and are easier to qualify. Since there is a guarantee, the risk for the lender is less than the non-secured resulting in a lower interest rate.

Secured loans can be easier to qualify but have longer tenures than unsecured loans resulting in borrowers paying more interest over time.

The types of secured loans are listed below. 

• SBI home loan
• SBI loan against property (LAP)
• SBI auto loan
• SBI gold loan
• SBI loan against fixed deposits
• SBI secured lines of credit

To qualify for a secured loan, a borrower doesn’t need to have a high credit score.

a. SBI Home loan

A home loan is a secured loan that allows people to borrow money from a financial institution or a bank to buy a new or resale home, build a new home, or renovate an existing one by offering it as collateral. Home loans are high-value loans at an economical interest rate and long tenures.

You can get a home loan from banks, housing finance companies, and Non-Banking Financial Companies (NBFCs). The interest rates offered on home loans are fixed-rate, floating-rate, and hybrid.

To become eligible for a home loan, the borrower must be at least 21 years old and not more than 65 years old at the time of loan maturity.

The home loans have multiple benefits including tax benefits, lower interest rates, and long repayment tenure.

b. SBI loan against property (LAP)

A Loan Against Property (LAP) also known as a mortgage loan is a type of secured personal loan that allows borrowing money by pledging property as collateral.

To become eligible for a loan against property (LAP), a person must not be less than 18 years of age and not greater than 70 years.

The loan amount offered in LAP is about 50% to 70% of the property’s market value, depending on the lender and credit profile of the borrower (credit score 750 and above).

The main eligibility criteria for LAP include age is 21 to 65 years old and stable income. The benefits of LAP are higher loan amounts, lower interest rate, and flexibility in loan usage.

c. SBI auto or car loan

A car loan or auto loan is a type of loan offered by banks and financial institutions to borrow money to buy a new or used car.

The vehicle financed as an auto loan serves as collateral, which means that the lender owns the car until the loan is paid off.

The main feature of car loans is financing options up to 85%-90% of the on-road price of the vehicle. While some banks also offer 100% finance on the on-road price of the vehicle. The SBI car loan tenure also goes up to seven years making the repayment option more feasible for customers.

Both salaried and self-employed are offered car loans but the eligibility criteria differ for both of them. The SBI car loan is offered to salaries having aged between 21 – 60 years, however, for self-employed the required age group is 18 – 65 years.

The main eligibility criteria to get an SBI car loan are stable income, minimum Rs. 2.5 lakhs p.a, and credit scores above 700.

The main benefits long repayment tenure, flexibility in loan usage and no restriction on loan usage. The interest rate offered by SBI on car loans is between 9.15% to 10.10% for new car loans and it ranked at position 8 for new car loans, according to Forbes article titled, “Best Car Loan Interest Rates In November 2024”.

d. SBI gold loan

SBI gold loan is a type of loan offered where a loan is offered to the applicant against the pledging of personal gold, gold jewelry, or gold coins as a security to the SBI.

The SBI gold loan applicant gets a loan from 70% to up to 90% of the gold amount. The repayment term is usually short, up to a few months. It has lower interest rates than unsecured loans since the loan is backed by collateral.

The main features of gold loans are attractive interest rates, loan-to-value, safety of gold, faster processing, and minimal paperwork.

The main eligibility criteria to get SBI gold loan is that you must own your gold jewellery, provide valid proof of identity and age must be 18 years old.

State Bank of India (SBI) provides gold loans of up to 75% of the value of the gold and once you pay your loan completely, you can safely retrieve your gold ornaments back.

e. SBI loan against fixed deposits

SBI loan against fixed deposit refers to a secured type of borrowing, provided by the bank against a fixed deposit.

Loan against fixed deposit is beneficial for customers not willing to bear withdrawal penalties. By using an FD deposit as collateral, a borrower receive funds quickly without any loss of interest.

The main features of SBI loans against fixed deposits are the higher margin, zero processing fee, and lower interest rate ( only 1-3% higher than the FD rate).

The main eligibility criteria for a loan against fixed deposit include the borrower must be above 18 years of age. Loan facilities against fixed deposits are not available to foreign citizens and NRIs.

f. Secured lines of credit

A secure line of credit is a form of revolving loan that requires an asset to contribute the borrowed amount. Different forms of security may be provided since security can be generated from real estate, equipment, inventory, or accounts receivable.

The secured lines of credit have less associated risk, generating better terms, like lower interest rates and higher credit limits than unsecured credit lines.

The main features of secured lines of credit include a higher loan amount, lower interest rate, ownership retention, and structured repayment terms.

The main eligibility criteria for secured lines of credit are quick disbursal and no sharing of profits. The main benefits of secured lines of credit of interest interest-only payments and a built credit history.

2. SBI unsecured loans

An unsecured loan is a type of loan that does not require any security and collateral from the borrower and only looks at the credit score, income, and financial capacity.

The unsecured loans have higher interest rates than secured loans due to the more risk associated as there is no security provided from the borrower’s end.

The types of unsecured loans are listed below.

• SBI personal loan
• SBI loan on credit card
• SBI medical loan
• SBI debt consolidation loan
• SBI business loan

a. SBI personal loan

SBI personal loan is a type of unsecured loan issued by banks and financial institutions based on criteria like employment history, repayment capacity, income level, profession, and credit history without any collateral or security.

Personal loans are meant to finance a particular need, for example, consolidating other debts, renovating a home, paying for medical treatment, financing a wedding, etc.

To get a personal loan, you need only three documents including income proof, residence or address proof, and identity proof.

As per the Financial Express article titled “Rising unsecured loan defaults return to haunt lenders“, published on October 30, 2024, the defaults in unsecured loans are rising at an alarming rate and individuals having more than two personal loans are unable to pay regular EMIs. The more defaults in unsecured loans have been sen by private sector lenders including ICICI Bank, Axis Bank, Yes Bank, Kotak Mahindra Bank, and Bajaj Finance.

b. Loan on credit card

State Bank of India (SBI) loan on a credit card is a pre-approved loan facility offered to existing SBI credit card users without any documentation.

SBI offers two types of loan on credit cards including Encash Inline and Encash. The only difference between these two is the loan amount offered. In the encash inline offer, the credit card holder gets a loan up to the available credit limit whereas in the encash offer the credit card user gets a loan above the available credit limit.

c. SBI medical loan

A medical loan is a type of personal loan specifically designed to cover medical expenses during a medical emergency. SBI medical loans are used to pay for a wide array of treatments and services, including expensive emergency procedures, elective surgeries, outpatient care, inpatient care, or any other procedures or treatments not previously covered by an insurance plan.

The features of the medical loan include no hidden charges and minimal documentation and the benefits include flexible repayment, quick approval, and high loan amounts.

d. SBI debt consolidation loan

A consolidation loan is a financial operation that allows people to pool or consolidate multiple debts including credit card bills and loans into one. The SBI debt consolidation becomes a great financial tool when you are paying higher interest rates on multiple credit card bills, and personal loans and having difficulty in managing monthly repayments.

The features of the consolidation loan are a single monthly payment and a lower and fixed interest rate. Simplified debt management and improved credit score are the benefits that come with this type of unsecured loan.

To get a debt consolidation loan, a person must have a credit score of 685 or higher.

e. SBI business loan (unsecured)

A business loan is a type of financial product designed to provide funds to businessmen for different operational needs. In general, SBI business loans help firms to expand, acquire equipment, manage a flow of money, and pay for everyday operations.

There are 2 types of business loans including secured and unsecured business loans. The secured business loans require collateral such as inventory, land, machinery etc. while unsecured loans or small business loans are offered without any collateral and therefore have a high risk for banks.

The features of the unsecured business loan are competitive interest rates, quick approvals, long repayment tenure of up to 15 years, and low processing charges (2% – 3%).

State Bank of India (SBI) launched “SME Digital Business Loans” on June 11, 2024, which sanctions business loans digitally in 45 minutes.

On July 1, 2024, SBI also launched “MSME Sahaj”, a web-based digital business loans solution for MSMEs’ against invoice financing. “The SBI bank’s customers can avail finance against their GST registered sales invoices of up to ₹1 lakh in less than 15 minutes”, as per a CNBC article titled “SBI launches 15-minute online loan solution for MSMEs“.

What are the eligibility criteria and interest rates for SBI loans?

The eligibility criteria and interest rates to get State Bank of India (SBI) loans differ on the type of loan, monthly income, and CIBIL score of the applicants.

The details of the loan type, eligibility criteria, and interest rate is given in the table below.

Loan Type	Eligibility Criteria	Interest Rates (p.a.)
SBI Home Loans	Indian Resident/NRIMinimum age: 18 years, Stable income source, CIBIL score of 700+.	8.50% – 9.65%
SBI Personal Loan	Salaried individuals or self-employed professionals with a minimum monthly income of ₹15,000 and age between 21 to 58 years having a CIBIL score of 700+ and minimum work experience of 2 years.	10.9% – 15.5%
SBI Auto Loan	Salaried individuals or self-employed professionals with minimum monthly income of ₹15,000 and age between 21 to 58 years having a CIBIL score of 700+ and minimum work experience of 2 years.	9.15%-10.10%
SBI Education Loan	Indian Resident Secured admission in a recognized institution (India or abroad)\ Co-borrower required (parent/guardian) with a stable income	11.15%
SBI Gold Loan	Indian ResidentAge: 18 – 70 years Pledge of gold jewelry or coinsKYC documents (e.g., Aadhaar, PAN)	10.20%
SBI Business Loan	Self-employed professionals and business entities: 21 – 65 years, stable business income, CIBIL score of 700+	9.10%