WHAT IS A LOAN?

Money borrowed  at time of your need to be returned back with interest at a specific period of time is called a loan. It can be used to  buy a car or , to build a home. The amount of money borrowed is typically repaid with interest over a specified period of time. the money which is borrowed is called PRINCIPAL, the cost of borrowing is called the INTEREST and the allowed time for paying back your loan is called TERM

It is better to take a loan for very large purchases or when you are in  an emergency. Getting a large loan or getting many loans that you can't pay back can cause huge financial problems for you as it becomes difficult to pay them back.



                         TYPES OF LOAN


Installment Loan

When you get an installment loan, you borrow all of the money at once and repay it in set amounts, or installments, on a regular schedule over a period of time.


Line of Credit

A personal line of credit is a type of revolving credit that lets you write checks for the amount  borrowed, up to a limit set by your  lender. The creditor doesn't cost anything till you issue  a check. as you issue a check you begin to pay interest on the amount you borrowed. Whatever you repay becomes available for you to borrow again.
                   

 
                        COSTS  OF LOAN

The cost of a loan is determined by the interest rate the lender offers and the length of time i.e. the  interest and the term you take to repay. In addition to interest, a lender may charge other fees called points for the loan application or to check your credit.
 

                       BENEFITS OF LOAN 

A loan gives you the money you need to pay for something big like a house, a car, college tuition, or major home repairs when you don't have the cash to cover the purchase. these loans let you borrow the money when you require it  and let you pay back in small installments over a period of time. 

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