What is a Loan?

Home
>
Loan
>
What is a Loan?

What is a Loan?

A loan is money that you borrow and agree to pay back over a set period of time with interest. The amount of money you borrow is called principal, and interest is the cost for borrowing the money. The length of time set to pay back the loan is known as the term.

It is best to get a loan only for very large purchases or in an emergency. Getting a large loan or getting many loans that you can't pay back can cause huge financial problems, because it can get very difficult to pay them back each month.

There are many benefits to getting a 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. Most people could not afford to do these things without loans.

Loans come in a variety of shapes and sizes each performing a different function and having different interest rates. Loan rates are variable, depending on status.

Loan repayments will depend on the amount borrowed and term. Loans are taken out with selected, reputable institutional money lenders.

Depending on the type of loan chosen you can borrow anywhere from £500 to £1,000,000 and can repay it over a period of between six months and twenty-five years.

Nowadays, it is quite easy for most people to qualify for a loan of one sort or another even if they have a bad credit history. Loans can be applied for in person, by telephone or more commonly now, over the Internet.

Loans can be used for any purpose. A loan can help you with home improvements such as a new kitchen or bathroom, that once-in-a-lifetime holiday, your dream car or repaying debts to reduce your monthly outgoings to a more manageable amount.

One of the most common types of loan is a secured loan. A secured loan is a loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make the necessary payments. The number one asset is property which could be your home, your office, your farm or your factory.

A secured loan uses your home as security. It is suitable if you want to raise a large amount; are having problems getting an unsecured loan; or have a poor credit history. Lenders are more flexible with their underwriting, making a secured Loan possible when you may have been turned down for an unsecured loan.

A secured Loan is a loan that a lender provides on the understanding that a property is secured against the loan. This type of loan is usually provided with a lower interest rate than an unsecured loan because you will have secured your property against it.

A secured loan enables homeowners to borrow capital and offset the risk against the value of their property. This means that anyone taking out a secured loan is effectively using their property to guarantee the loan. If the borrower fails with the repayments, there could be a possibility their home is at risk.

Secured loans are normally quicker to arrange because the lender has some security to offset against the loan should you default on the repayments. In most cases this is the cheapest type of loan with interest rates on the loan a few percentage points above base rate.

The only problem with loans in general, is that they will have to be paid back.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

In The News:

Suzlon Rebounds as Loans Promise to Avert Default
BusinessWeek
By Natalie Obiko Pearson on May 25, 2012 Suzlon Energy Ltd.'s (SUEL) convertible bonds are rebounding from a four-month low after India's biggest wind-turbine maker obtained loan pledges to avoid default in the coming three weeks.

and more »

Christian Science Monitor
Student loan proposals from both parties denied
TheReporter.com
By AP WASHINGTON (AP) -- The Senate rejected dueling Democratic and Republican plans on Thursday for averting a July 1 doubling of interest rates on federal college loans for 7.4 million students, pushing back efforts to resolve the election-season ...
Psst, students. Still hope for low-rate student loans, despite Senate balkingChristian Science Monitor
Senate kills both sides' student loan plansThe Tennessean

all 522 news articles »

China Banks May Fall Short of Loan Target as Demand Slumps
San Francisco Chronicle
May 25 (Bloomberg) -- China's biggest banks may fall short of loan targets for the first time in at least seven years as an economic slowdown crimps demand for credit, three bank officials with knowledge of the matter said.

and more »

Inpex, Total seek $20 bln loans for Australia LNG -sources
Reuters
Export credit agencies to drive funding * Deal shows investor appetite intact for well advanced, high quality projects * Japanese banks to drive pricing of loan By Sharon Klyne and Wakako Sato SYDNEY/TOKYO, May 25 (Reuters Basis Point) - Inpex Corp and ...

and more »

ECB loans, rate cut view pull down Euribor rates
Reuters
FRANKFURT, May 25 (Reuters) - Key euro zone bank-to-bank lending rates fell to new two-year lows on Friday, dragged down by the ECB's recent deluge of ultra-cheap bank loans and a growing expectation it will have to cut euro zone interest rates again ...

and more »

Home loan: prepayment helps
Hindustan Times
A home loan is usually the biggest debt that a person takes on during a lifetime. Given a long tenor and high amount of loan, the total interest you pay to the lender is almost as big, if not bigger, as the loan amount itself.

and more »

Oregon Bankers Association Celebrates Small Business Week with Tips on ...
MarketWatch (press release)
SALEM, Ore., May 25, 2012 /PRNewswire via COMTEX/ -- In honor of National Small Business Week (May 20-26), the Oregon Bankers Association (OBA) has issued tips to help small business acquire a loan from Oregon banks. The OBA has also developed a small ...
Deadline to Apply for SBA Economic Injury Disaster Loans in Rhode Island is ...U.S. Politics Today
Deadline for New York Private Non-Profit Organizations to Apply for SBA ...DigitalJournal.com (press release)

all 15 news articles »

Payday Loan Companies on Loans.net Find New Customers in Recent College ...
MarketWatch (press release)
NEW YORK, May 25, 2012 (GlobeNewswire via COMTEX) -- via PRWEB - For years, payday loans were used by a specific group of low-income wage earners in the US, but that has now changed according to a new study by ThinkFinance, which offers banking ...

and more »

Failing students on loans
msnbc.com
Gerry Connolly, D-Va., joins Chris Cillizza to discuss the student loan debate taking place on Capitol Hill. >>> congress rejected calls from president obama and mitt romney to keep student loan rates down and both pears are paving the way for rates to ...

MLive.com
Federal lawsuits for student loan recovery far less common in West Michigan ...
MLive.com
comThe number of lawsuits filed for student loan recovery is far larger on the east side of the state of Michigan than in West Michigan. GRAND RAPIDS, MI -- If you've defaulted on your student loans, you're far less likely to wind up in front of a ...

and more »

Google News