A loan is a financial agreement in which a lender provides money to a borrower with the expectation that it will be repaid over time, usually with interest. Loans help individuals and businesses meet financial needs such as buying a home, starting a business, paying for education, or handling emergencies.
There are different types of loans. Personal loans are commonly used for everyday expenses and usually do not require collateral. Home loans or mortgages are used to purchase property and are repaid over long periods. Auto loans help people buy vehicles, while student loans support education costs. Businesses often take business loans to expand operations or manage cash flow.
One important part of a loan is interest, which is the extra amount paid to the lender for using the money. Interest rates can be fixed, staying the same throughout the loan term, or variable, changing based on market conditions. The loan tenure (repayment period) and monthly installments depend on the loan amount, interest rate, and terms agreed upon.
Before taking a loan, it is important to assess your repayment ability, compare lenders, read terms carefully, and avoid borrowing more than needed. When used wisely, loans can be a helpful financial tool that supports growth and stability.
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