Loans you actually need vs ones you don't
In this chapter: Home loan as the most efficient loan in India · Education loan — the moratorium, deduction, and re-payment schedule · Personal loans, the cost of speed, and when they make sense · Top-ups vs gold loans vs LAS (loan against securities)
Not all debt is equal. The cheapest debt for most Indians is a home loan (8-9.5%, tax-deductible interest under Section 24). Education loans (10-13%) carry an interest deduction (Section 80E) for up to 8 years post-moratorium. Personal loans (12-22%) are unsecured and exist mainly because they are fast, not because they are cheap. Credit-card revolving balances (30-42%) are the most expensive consumer debt in India and should be avoided as a recurring practice.
A home loan deserves special attention: principal repayment qualifies under Section 80C (up to ₹1.5L), interest under Section 24 (up to ₹2L for self-occupied, unlimited for let-out subject to set-off limits). Combined with rising property values and EMI inflation-protection, a home loan is often a wealth-building tool, not a wealth-destroying one. Education loans benefit specifically from the moratorium during the course plus 1 year, and the 8-year window for 80E. A LAS (loan against shares/MFs) can be 9-10% — much cheaper than a personal loan if you have securities to pledge.
The hierarchy of borrowing for an emergency: 1) sweep-in/FD overdraft (5-7%), 2) home-loan top-up (8.5-10%), 3) LAS (9-10%), 4) gold loan (8-12%), 5) personal loan (12-22%), 6) credit-card EMI conversion (14-20%, but with one-time charges), 7) credit-card revolve (30%+). Most people invert this stack and grab whatever is fastest. A 30-second pause to consider the order saves real money over a working life.