partial view of businessman pointing with pen at loan agreement

What is a Loan?

A loan refers to a type of credit. With a loan, a specific amount of money is lent to another individual or entity in exchange for future repayment for the value of the principal amount usually with interest.
Lenders of loans are usually institutions such as banks or credit unions. The lender advances a sum of money to the borrower who agrees to repay the borrowed amount on specified terms. There are different types of loans available, including secured, unsecured, personal, and commercial loans.
A mortgage loan or a car loan are examples of secured loans. A secured loan is a loan that is backed by or secured by collateral. An example of an unsecured loan is a credit card. This simply means that the borrowed money is not backed by any collateral.

Investopedia provides more information regarding loans at:   https://www.investopedia.com/terms/l/loan.asp

Types of loans:

  1. Secured Loan
  2. Unsecured Loan

 

Secured Loan:

A mortgage loan or a car loan are examples of secured loans. A secured loan is a loan that is backed by or secured by collateral. In these scenarios, the collateral becomes the asset for which the loan is secured, that is, the home or the car. Other forms of collateral may be required by the lender before coming to a final agreement with the borrower.

Unsecured Loan:

An example of an unsecured loan is a credit card. This simply means that the borrowed money is not backed by any collateral. With unsecured loans, lenders typically charge a higher interest rate than secured loans, because the risk of default (Borrower not repaying) is higher than with secured loans. With unsecured loans, rates can fluctuate based on key factors including a borrower’s credit score.

Being able to access the loan you need when you need it has never been easier than via https://www.thefinroute.com/. Browse your options, speak with representatives and get the loan that suits your needs best.

Loans and debt have their function in the bigger picture of access to money and should be taken with a high level of responsibility and understanding of the terms of the agreement needed to access your loan. To read more on Loans you can visit https://www.nerdwallet.com/article/loans/personal-loans/what-is-a-loan.

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