What is a loan? This is a question many people often ask. Loans are more than just borrowed money: they are a lifeline for many people when savings are not enough, and a driver of opportunity when used wisely.
According to a LendingTree report, about 24.6 million Americans owe a collective $253 billion in personal loans. This statistic highlights that borrowing is not unusual but something nearly half of households deal with daily.
This complete guide explains everything you need to know about loans in clear, practical terms. By the end, you will not only know what a loan is, but also feel confident making smart borrowing decisions that support your future.
See also: How to Start a Business and Get a Loan: Your Comprehensive Guide
Key Takeaways
- A clear understanding of a loan helps you make smarter financial decisions and avoid unnecessary debt.
- Check the loan interest rate and repayment terms before signing.
- Know the different loan types to choose the best fit for your needs.
- Meet eligibility criteria and prepare key documents to improve approval chances.
What is a Loan?
A loan is a sum of money borrowed from a lender, such as a bank, credit union, or online platform, under an agreement to repay it within a set period.
Repayment usually includes the original amount borrowed (the principal) plus an additional cost known as interest. Loans are used for different purposes, ranging from personal expenses like education or home purchases to business needs such as expansion, equipment, or working capital.
By providing access to funds upfront, loans make it possible to meet financial goals that may otherwise be out of reach.
How Loans Work: Principal, Interest, Repayment, and Collateral Explained Simply
At its core, a loan is an agreement between two parties: a lender, who provides money, and a borrower, who promises to repay it under agreed terms. While it may sound straightforward, loans come with moving parts that can make or break your financial journey.
To borrow smartly, you need to understand four key components: principal, interest, repayment, and collateral. Let us break them down:
The Principal
The principal is the foundation of any loan. It refers to the exact sum of money borrowed from a lender, whether it is a bank, a credit union, or a digital finance platform.
For instance, if you take out a $20,000 loan to expand your small business, that $20,000 is the principal. All other aspects of the loan, from the interest you are charged to the size of your monthly instalments, are calculated based on this figure.
The bigger the principal, the more expensive the loan will be over time, since lenders apply their charges on top of it. For this reason, borrowers are always advised to take only what they genuinely need rather than over-borrowing because higher sums appear attractive.
Interest
Interest is essentially the cost of borrowing money. It is the fee that lenders charge in exchange for giving you access to capital, and it is usually expressed as a percentage of the principal.
Interest rates can be fixed, remaining the same throughout the term of the loan, or variable, meaning they fluctuate depending on market conditions, inflation, or central bank policies. A fixed rate makes repayment predictable, while a variable rate might start low but increase over time, which can create challenges for budgeting.
Today, the way lenders calculate interest is becoming more sophisticated. Traditional banks may still rely on credit scores and income records, but many fintech lenders now use artificial intelligence to evaluate risk, analysing spending patterns, transaction histories, and even alternative data to decide what rate to offer a borrower.
Repayment
Repayment is the process of returning the borrowed money to the lender under agreed terms. This usually happens through regular instalments that combine part of the principal with the interest charged. Many loans are structured into equal monthly payments, which makes planning easier for the borrower.
Some arrangements, however, may involve smaller payments at first and a large lump sum, often called a balloon payment, at the end. Increasingly, modern lenders are experimenting with flexible repayment models that allow borrowers to pay more when their cash flow is strong and less when income is tight.
Regardless of the method, repayment is a serious obligation. Failure to meet the schedule often leads to penalties, extra fees, and long-term consequences such as damage to your credit profile.
Collateral
Collateral is the asset that a borrower pledges to secure a loan. It acts as a safety net for the lender, ensuring that if the borrower defaults, there is something of value that can be claimed to recover the debt. Traditional forms of collateral include real estate, vehicles, machinery, or valuable savings.
By offering collateral, borrowers usually enjoy lower interest rates because the lender’s risk is reduced. However, the downside is clear: if you cannot meet your repayment obligations, you may lose the asset you pledged.
In today’s financial landscape, especially in emerging markets and fintech ecosystems, the concept of collateral is expanding. Some lenders are beginning to accept digital assets, invoices, or even projected future earnings as security, reflecting the changing nature of value in the global economy.
See Also: Secured vs Unsecured Loans – Key Differences and How to Choose The Right One for You
Types of Loans
Loans come in different forms, each designed to meet specific financial needs, whether for individuals, businesses, or governments.
Understanding the key types of loans helps borrowers choose the right option based on purpose, repayment flexibility, risk, and accessibility.
Below, we break down the most common loan types:
1. Personal Loans
Personal loans are among the most common types of credit worldwide. They are usually unsecured, meaning you do not need collateral, and are used for personal expenses like education, medical bills, weddings, or travel.
| Feature | Details |
|---|---|
| Secured/Unsecured | Mostly unsecured |
| Typical Uses | Emergencies, education, weddings, home improvements, travel |
| Repayment Term | 1–7 years |
| Interest Rate | Depends on credit score and lender policies |
| Global Relevance | Widely available from banks, credit unions, and fintech lenders |
2. Business Loans
Business loans help entrepreneurs, startups, and SMEs finance growth, equipment purchases, or working capital. They can be secured or unsecured depending on the lender’s requirements.
| Feature | Details |
|---|---|
| Secured/Unsecured | Both |
| Typical Uses | Startup funding, SME growth, working capital, expansion |
| Repayment Term | 1–10 years |
| Interest Rate | Varies based on business risk and financial history |
| Global Relevance | Essential for SMEs and entrepreneurs worldwide |
3. Secured vs. Unsecured Loans
When borrowing, one of the first distinctions to understand is whether a loan is secured or unsecured. A secured loan requires the borrower to pledge collateral, such as a house, car, or piece of land, which the lender can seize if repayments are not made.
Because this reduces the lender’s risk, interest rates are usually lower, and repayment terms are more flexible.
On the other hand, unsecured loans do not require collateral. Instead, approval depends heavily on the borrower’s creditworthiness, income level, and repayment history. While faster to obtain, unsecured loans generally come with higher interest rates, stricter qualification criteria, and lower borrowing limits.
4. Microloans
Microloans are small-value loans aimed at individuals or micro-businesses who may not qualify for traditional banking credit.
They are particularly popular in developing economies where access to financial services is limited. Microfinance institutions, NGOs, and peer-to-peer lending platforms have made microloans a critical tool for empowering farmers, traders, artisans, and young entrepreneurs.
| Feature | Details |
|---|---|
| Secured/Unsecured | Usually unsecured |
| Typical Uses | Farmers, small traders, artisans, early-stage entrepreneurs |
| Repayment Term | Short-term (less than 2 years) |
| Interest Rate | Moderate to high, depending on the microfinance institution |
| Global Relevance | Important in emerging markets; supported by NGOs and microfinance banks |
5. Digital or Fintech Loans
Digital or fintech loans are one of the fastest-growing financial innovations of the past decade. Delivered via mobile apps, online platforms, or integrated digital banking services, these loans are designed for speed and convenience.
Instead of relying on traditional collateral, fintech lenders often use AI algorithms, digital footprints, and transaction histories to assess creditworthiness in real time.
The most popular products in this category include instant payday loans, mobile overdrafts, and Buy-Now-Pay-Later (BNPL) schemes, which allow consumers to split payments into instalments.
| Feature | Details |
|---|---|
| Secured/Unsecured | Mostly unsecured |
| Typical Uses | Quick cash, buy-now-pay-later (BNPL), mobile payday loans |
| Repayment Term | Days to 2 years |
| Interest Rate | Can be very high if short-term; some BNPL options charge 0% |
| Global Relevance | Rapidly expanding across developed and developing economies |
6. Mortgage and Real Estate Loans
Mortgages remain one of the most significant forms of borrowing worldwide, given the high cost of real estate.
These are long-term loans secured by the property being purchased, meaning the lender can repossess the property if repayments are not made. Mortgages typically run between 10 and 30 years, making them a long-term commitment for borrowers.
The real estate loan sector continues to be a cornerstone of wealth-building in developed markets and is increasingly growing in developing countries as housing finance systems expand.
| Feature | Details |
|---|---|
| Secured/Unsecured | Secured against property |
| Typical Uses | Buying homes, commercial property, and real estate investment |
| Repayment Term | 10–30 years |
| Interest Rate | Varies by region; linked to housing market conditions |
| Global Relevance | One of the largest loan markets globally; sustainable mortgages are on the rise |
See Also: How to Refinance Your Mortgage to Lower Your Interest Rates — A Proven Guide
7. Government and Policy-Backed Loans
Governments around the world often step in to provide policy-backed or subsidised loans that target key sectors of the economy.
These loans may be directed at students, small businesses, farmers, or homeowners, and they typically come with lower interest rates, longer repayment periods, and more flexible requirements than commercial loans.
In developed economies, examples include U.S. Small Business Administration (SBA) loans or student loan schemes. In emerging markets, governments partner with development banks or international agencies to extend credit to underfunded sectors like agriculture or renewable energy.
| Feature | Details |
|---|---|
| Secured/Unsecured | Can be both, depending on the programme |
| Typical Uses | SME support, student loans, agriculture, housing, green energy |
| Repayment Term | 5–25 years |
| Interest Rate | Lower than market rates, sometimes partially subsidised |
| Global Relevance | Available worldwide, e.g., U.S. SBA loans, EU development funds, and African youth loans |
See Also: What is a Debt Consolidation Loan and How Does It Work?- A Comprehensive Guide
Key Loan Terminologies Every Borrower Must Know
When it comes to borrowing money, the devil is often in the details, and those details are hidden in financial jargon.
Many borrowers sign loan agreements without fully understanding the terms, only to realise later that they have committed to conditions they cannot meet. Knowing key loan terminologies is crucial to making informed financial decisions.
Here is a breakdown of essential terms every borrower must know:
| Term | Definition |
|---|---|
| Principal | The original amount of money you borrow from a lender. |
| Interest Rate | The percentage charged by the lender for borrowing the principal. It can be fixed or variable. |
| Annual Percentage Rate (APR) | The true yearly cost of borrowing, including interest and additional fees. |
| Tenure or Loan Term | The agreed length of time you have to repay the loan (e.g., 6 months, 5 years). |
| Collateral | An asset, like a property or car, which is usually pledged to secure a loan. |
| Credit Score or Creditworthiness | A numerical rating or record of your ability to repay debt, based on past financial behaviour. |
| Default | Failure to make loan repayments as agreed. |
| Repayment Schedule | The plan outlines how and when repayments must be made. |
| Balloon Payment | A large lump-sum payment, which is usually due at the end of a loan term. |
| Debt-to-Income Ratio (DTI) | A measure of your monthly debt compared to your income. |
The Loan Process: From Application to Repayment
Securing a loan is not just about asking for money and getting it; it is a structured process with clear steps designed to protect both the lender and the borrower.
Whether you are applying for a quick digital loan through a fintech app or negotiating a large business loan with a bank, the journey follows a similar pattern.
Understanding each stage of the loan process helps you prepare better, avoid costly mistakes, and improve your chances of approval.
Step 1: Eligibility and Requirements
Every loan journey begins with an eligibility check. Lenders want to be sure you can repay before they release any funds.
This means reviewing your identity, income, financial history, and sometimes the assets you can pledge as security. Meeting these requirements increases your chances of approval and may even help you secure better terms.
| Requirement | What It Means |
|---|---|
| Identification & Documentation | Valid ID (e.g., international passport, driver’s licence, national ID) and proof of address. |
| Income Verification | Payslips, tax returns, or bank statements. For businesses, audited accounts or turnover records. |
| Collateral | Tangible assets like property, vehicles, or equipment that can be pledged as security. |
| Credit History or Credit Score | A record of your past borrowing behaviour. Increasingly includes alternative digital footprints. |
| Debt-to-Income Ratio (DTI) | The percentage of your income already committed to debt. |
Step 2: Application Process
Once you meet the basic requirements, the next step is submitting your loan application. Today, this can happen either online through a fintech platform or physically at a bank branch.
The application stage is where you formally request funds, present your supporting documents, and outline how you plan to use the loan. A well-prepared application often makes the difference between approval and rejection.
| Aspect | What It Involves |
|---|---|
| Loan Application Form | Filling out personal or business details, the loan amount, and the purpose of the loan. |
| Supporting Documents | Submit ID, financial records, tax documents, or business plans. |
| Loan Purpose Statement | Clearly explaining what the loan will fund (e.g., business expansion, asset purchase, or personal need). |
| Digital vs. Traditional Application | Online fintech apps offer quick approval, while traditional banks require more paperwork. |
| Application Fees (if any) | Some lenders charge a non-refundable processing or evaluation fee. |
Step 3: Approval and Disbursement
After you have submitted your application, the lender takes time to review it. This stage is all about assessment and decision-making, checking your creditworthiness, verifying documents, and determining whether to approve your loan.
If approved, the funds are then released (disbursed) to you, either as a lump sum or in instalments, depending on the loan type.
| Aspect | What It Involves |
|---|---|
| Credit Assessment | Lenders evaluate your credit history, DTI ratio, and repayment behaviour. |
| Document Verification | Cross-checking your submitted records (ID, income proof, collateral). |
| Loan Approval Decision | Lender decides to approve, reject, or request more information. |
| Loan Agreement Signing | Borrower reviews and signs legal documents detailing terms, conditions, and obligations. |
| Disbursement of Funds | Approved loan is released, directly to your account, business vendor, or project. |
See also: How to Start a Money Lending Business: Step-by-Step Proven Guide
Step 4: Repayment Plans
Once the loan has been disbursed, the repayment phase begins. This is where many borrowers face challenges, not because they cannot repay, but because they did not fully understand the structure of their repayment plan.
Knowing how repayments are calculated and scheduled helps you stay disciplined, avoid penalties, and maintain a healthy credit profile.
| Aspect | What It Involves |
|---|---|
| Repayment Schedule | Agreed timeline for paying back the loan, usually monthly or quarterly instalments. |
| Instalments (EMIs) | Equal monthly instalments covering both principal and interest. |
| Interest Structure | Could be fixed (same amount throughout) or variable (changes with market rates). |
| Grace Period | A short period after disbursement before repayments start (if offered). |
| Balloon Payments | A large final payment after smaller periodic ones. |
| Prepayment & Penalties | Option to pay off the loan early, sometimes with extra charges. |
| Restructuring Options | Adjusting terms if you face difficulty repaying. |
Step 5: Default and Consequences
Despite the best intentions, some borrowers struggle to meet their repayment obligations. Defaulting on a loan, missing payments or failing to repay altogether can have serious financial and legal consequences.
Understanding these risks upfront helps you stay disciplined and avoid falling into a debt trap.
| Aspect | What It Involves | Why It is Important |
|---|---|---|
| Missed Payments | Failure to pay instalments as scheduled. | Triggers late fees and damages your credit score. |
| Loan Default | Repeated non-payment or inability to meet loan terms. | It can lead to legal action and seizure of collateral. |
| Penalties & Extra Charges | Additional costs for overdue payments or default. | Increases your overall debt burden. |
| Credit Score Damage | Negative records are entered into credit bureaus. | Affects your ability to secure future loans or get favourable terms. |
| Collateral Seizure | Lender claims pledged assets (e.g., car, property) in secured loans. | You risk losing valuable property. |
| Debt Collection Measures | Calls, reminders, legal notices, or collection agencies pursuing repayment. | It can be stressful and harm your reputation. |
| Loan Restructuring (Last Resort) | Some lenders may renegotiate terms to help you catch up. | Prevents total default but may extend the repayment period. |
Understanding Loan Interest Rates
When trying to understand what a loan is, one of the most important aspects to learn about is the cost of borrowing, which comes in the form of loan interest rates.
In simple terms, interest is the extra money you pay a lender on top of the amount you borrowed, known as the principal. Lenders charge interest as a fee for giving you access to their money, and it is usually calculated as a percentage of the loan amount.
Difference Between Fixed vs Variable Interest Rates
Broadly, lenders offer two main kinds of interest rates: fixed and variable. A fixed interest rate remains the same throughout the agreed loan repayment terms, making it predictable and easier to plan for.
On the other hand, a variable rate changes depending on market conditions, which means your repayment amount may rise or fall over time. Knowing the difference helps you make better borrowing decisions.
Below is a table showing the clear differences between fixed and variable interest rates.
| Type | What It Means | Pros | Cons | Best For |
|---|---|---|---|---|
| Fixed Interest Rate | The rate stays the same throughout the loan term. | Predictable payments, easier budgeting, protection from market fluctuations. | Usually higher than starting variable rates; less flexibility if market rates fall. | Borrowers who prefer stability and long-term planning. |
| Variable Interest Rate | The rate changes over time, based on market conditions or a benchmark index. | May start lower than fixed rates with potential savings if rates drop. | Payments can increase if rates rise, making budgeting harder. | Borrowers who are comfortable with some risk and short-term loans. |
How Interest Rates Affect Loans
Interest rates do not just determine how much you will repay; they shape the entire borrowing experience. From the size of your monthly instalments to your overall loan cost, even a slight change in rates can have a major impact.
Whether you are taking a personal loan, a business loan, or a mortgage, understanding this effect helps you make smarter financial decisions and avoid unnecessary debt stress.
| Impact Area | How Interest Rates Affect It |
|---|---|
| Monthly Payments | Higher rates increase your instalments, while lower rates reduce them. |
| Total Loan Cost | High rates make you pay significantly more over the loan’s lifespan. |
| Loan Tenure Options | With higher rates, shorter terms may be more cost-efficient; with lower rates, longer terms become attractive. |
| Borrowing Power | High rates reduce the amount you can borrow affordably; low rates expand your options. |
| Business Profitability | For entrepreneurs, high rates eat into profits, while low rates free up cash for growth. |
| Debt Burden | Rising interest rates can push borrowers toward default if cash flow does not keep up. |
Credit Scores and Credit History: The Passport to Borrowing
Your credit score and credit history are like a financial report card that lenders check before approving a loan. They reveal how well you have handled money in the past, whether you repay on time, how much debt you carry, and if you have defaulted before.
With AI-powered credit systems and alternative data tracking like utility bills or mobile money records, your financial footprint matters more than ever. A strong credit profile does not just get you approved; it also unlocks better interest rates and favourable loan terms.
| Factor | Good Credit Profile | Poor Credit Profile | Impact on Borrowing |
|---|---|---|---|
| Loan Approval | High chance of approval with multiple lenders competing for your application. | Frequent rejections or approvals only from high-risk lenders. | Determines whether you can access funds at all. |
| Interest Rates | Lower interest rates, sometimes with special promotional offers. | Higher rates due to increased lender risk. | Affects total repayment and affordability. |
| Loan Amount | Eligible for larger sums based on trustworthiness. | Limited to smaller amounts with strict conditions. | Defines your borrowing power. |
| Repayment Flexibility | Access to longer terms, grace periods, and restructuring options. | Rigid terms with little or no negotiation room. | Influences comfort in repayment. |
| Collateral Requirements | May qualify for unsecured loans (no collateral needed). | Often required to pledge assets for even small loans. | Affects ease of borrowing. |
| Future Opportunities | Builds long-term credibility, unlocking mortgages, business loans, and investor trust. | Damages financial reputation, limiting future access to credit. | Impacts long-term financial growth. |
Types of Credit Scores and How They Affect Interest Rates?
When learning about a loan, one of the most important things to understand is how your credit score influences the loan interest rates you are offered.
For borrowers, the table below shows how different ranges of credit scores impact the interest rates lenders typically offer.
| Credit Score Range | Loan Interest Rates | Impact on Borrower |
| 750 – 850 (Excellent) | 4% – 6% | Borrowers enjoy the lowest interest rates, faster approvals, and better loan repayment terms |
| 700 – 749 (Good) | 6% – 9% | Borrowers still get favourable rates, but may not access the very best offers |
| 650 – 699 (Fair) | 9% – 12% | Loan eligibility remains possible, but interest rates are higher, increasing overall repayment costs |
| 600 – 649 (Poor) | 12% – 18% | Borrowers face high interest rates and may only qualify for limited loan options |
| Below 600 (Very Poor) | 18% and above | Very limited access to credit, high interest rates, and a strong risk of loan application rejection |
Pros and Cons of Borrowing Money
Borrowing money can be a powerful tool when managed wisely, but it can also become a trap if handled carelessly. Today, access to credit is easier than ever, thanks to fintech apps, digital banks, and government-backed loan schemes.
Yet, the decision to take a loan should never be taken lightly. Understanding both the advantages and disadvantages will help you borrow strategically and avoid unnecessary financial strain.
| Pros | Cons |
|---|---|
| Provides immediate cash for personal needs, emergencies, or business growth. | Increases your financial obligations, sometimes beyond comfort. |
| Entrepreneurs can scale faster with capital injections. | Some loans come with high rates that inflate repayment amounts. |
| Wide range of loan types (personal, business, digital, secured). | Missing payments can damage credit history and lead to penalties. |
| Can use borrowed funds to seize opportunities (e.g., property, investments). | Secured loans put your assets at risk if you default. |
| Responsible borrowing improves credit score, unlocking better terms later. | Processing fees, late charges, and penalties can add up unexpectedly. |
| Loans backed by the government or institutions can bridge gaps during tough times. | Owing money can cause anxiety and limit financial freedom. |
Smart Borrowing Tips For Entrepreneurs and Individuals
Borrowing does not have to be a burden; it can be a stepping stone if approached wisely. By planning, comparing options, and staying disciplined, you can enjoy the benefits of credit while avoiding its pitfalls.
| Smart Tip | How to Apply It |
|---|---|
| Borrow Only What You Need | Do not take more than your actual requirement, even if you qualify for a bigger loan. |
| Compare Lenders | Check banks, fintech apps, and cooperative societies before choosing. |
| Understand the Total Cost | Look beyond monthly instalments, consider APR, fees, and penalties. |
| Align Loan with Income | Match repayment schedules with salary dates or business cash flow. |
| Maintain a Good Credit Score | Pay bills on time and avoid unnecessary debts. |
| Read the Fine Print | Carefully check loan agreements for hidden charges and clauses. |
| Have a Repayment Strategy | Set aside funds monthly or automate repayments. |
| Use Loans for Productive Purposes | Focus on business growth, investments, or essential needs, not lifestyle splurges. |
Rule of Thumb: If the loan will not generate future income or long-term value, think twice before taking it.
See also: Loan Apps with BVN Requirements in Nigeria
Borrowing Money Trends and Innovations
The way people and businesses borrow money has changed dramatically in recent years. Traditional banks are no longer the only option; fintech startups, digital lenders, and even blockchain-based platforms are redefining access to credit.
Borrowers now enjoy faster approvals, more flexible repayment structures, and innovative products tailored to their needs. At the same time, stricter regulations and smarter technology aim to protect consumers from predatory practices.
| Trend or Innovation | What It Means |
|---|---|
| Fintech Lending | Mobile apps and online platforms offer instant loans without visiting a bank. |
| AI-Powered Credit Scoring | Uses alternative data like phone usage, bill payments, and online transactions to assess creditworthiness. |
| Blockchain & Smart Contracts | Peer-to-peer loans are executed via blockchain for transparency and security. |
| Buy Now, Pay Later (BNPL) | Short-term instalment financing integrated into shopping platforms. |
| Green and Sustainable Loans | Loans designed to support eco-friendly projects and businesses. |
| Stronger Consumer Protection | Regulators are introducing stricter laws on interest caps, transparency, and fair practices. |
Conclusion
Understanding a loan is not just about knowing that money is borrowed and repaid; it is about recognising how borrowing can shape your financial journey.
For anyone considering borrowing, the most important step is to carefully weigh the pros and cons of loans, study the loan interest rates offered, and fully understand the loan repayment terms.
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Frequently Asked Questions (FAQs)
What is a loan?
A loan is when you borrow money from a lender, such as a bank or credit union, with the agreement to pay it back over time. The repayment usually includes both the amount borrowed and an extra cost known as interest.
Why do people take loans?
People take loans for many reasons, such as paying school fees, buying a car, expanding a business, or covering emergencies. Loans provide access to funds when savings are not enough.
Who can give me a loan?
Loans can come from banks, microfinance institutions, credit unions, online lenders, and sometimes even employers or friends. The choice depends on your needs and the terms each lender offers.
What are the main types of loans?
The main types of loans include personal loans, mortgages, student loans, car loans, and business loans. Each one is designed for a specific purpose.
How do loans work?
Loans work by allowing you to borrow a fixed amount and repay it in instalments over a set time. You pay back the original amount plus interest, based on the loan interest rates and the agreed repayment terms.
What is the difference between personal and business loans?
Personal loans are used for individual needs such as medical bills or home repairs. Business loans, on the other hand, are designed to help entrepreneurs fund operations, equipment, or expansion.
What are loan interest rates?
Loan interest rates are the percentage a lender charges you for borrowing money. They can be fixed, meaning they stay the same, or variable, meaning they change with market conditions.
What are loan repayment terms?
Loan repayment terms refer to how long you have to repay the loan, such as 12 months, 5 years, or 30 years. Longer terms mean smaller monthly payments but more total interest.
What are loan collaterals?
Loan collaterals are assets, like a car or property, that you pledge as security for a loan. If you fail to repay, the lender can take the collateral to recover their money.
What are the key requirements for a loan?
The key requirements for a loan often include proof of income, identification documents, credit history, and sometimes collateral. Lenders check these to decide if you qualify.
