Loan
A loan is a financial arrangement where a lender provides money to a borrower, who agrees to repay it over time with interest. Loans can be used for various purposes, such as buying a home, funding education, or starting a business.
Types of Loans
- Secured Loans – Require collateral (e.g., home loans, car loans).
- Unsecured Loans – No collateral needed (e.g., personal loans, credit cards).
- Fixed-Term Loans – Repaid in fixed installments over a set period.
- Revolving Loans – Can be borrowed, repaid, and borrowed again (e.g., credit lines).
Key Loan Components
- Principal – The amount borrowed.
- Interest Rate – The cost of borrowing, expressed as a percentage.
- Loan Term – The duration for repayment.
- Repayment Schedule – Monthly or periodic payments.
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