Loans are financial products that allow individuals or businesses to borrow money from a lender, typically a bank or financial institution, with an agreement to repay the borrowed amount along with interest over a specified period.
Loans provide a means to meet immediate financial needs, whether for personal, educational, or business purposes.
Loans provide a means to meet immediate financial needs, whether for personal, educational, or business purposes.
Key Features of Loans
- Borrowed Amount: When you take out a loan, you receive a lump sum of money, which you are required to repay according to the agreed terms
- Interest Rates: Loans are typically provided with an interest rate, which is the cost of borrowing the money. The rate can be fixed or variable, depending on the type of loan.
- Repayment Terms: Loans come with a set repayment schedule, which includes the amount of time you have to repay the loan and the frequency of payments (monthly, quarterly, etc.).
- Collateral: Some loans, known as secured loans, require collateral (e.g., property or assets) as a guarantee for the loan repayment. Unsecured loans do not require collateral but may have higher interest rates.
Types of Loans
Benefits of Loans
