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
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.
For more details, send a sms
Loan FAQs
1. What is a loan?
A loan is a financial agreement where a lender provides money to a borrower, who agrees to repay it with interest over time.
2. What are the different types of loans?
Loans include personal loans, home loans, auto loans, business loans, education loans, and payday loans.
3. How is loan interest calculated?
Loan interest is calculated based on the principal amount, interest rate, and loan tenure. It can be simple or compound interest.
4. What is collateral in a loan?
Collateral is an asset (such as a house or car) pledged by the borrower to secure the loan, ensuring repayment.
5. What is the difference between secured and unsecured loans?
Secured loans require collateral, while unsecured loans do not but usually have higher interest rates.
6. What factors affect loan approval?
Factors include credit score, income, employment stability, existing debt, and loan repayment history.
7. Can I repay a loan early?
Yes, but some lenders charge a prepayment penalty for early loan closure.
8. What happens if I miss a loan payment?
Missing payments can lead to late fees, a lower credit score, and potential legal action by lenders.
9. How can I improve my eligibility for a loan?
Improving credit score, reducing existing debt, increasing income, and maintaining a stable job can boost loan eligibility.
10. How do I compare loan offers?
Compare interest rates, loan tenure, EMI, processing fees, and prepayment options before choosing a lender.