Understanding Loans & Their Types
A loan is money borrowed from a bank or financial institution that must be repaid over time with interest. Loans help meet major life needs such as education, housing, business growth, or emergencies.
Principal Amount
The actual amount borrowed from the lender.
Interest
Extra cost charged by the lender for using the money.
Repayment Schedule
Monthly or yearly payments over a fixed tenure.
Secured Loans
Backed by collateral such as property, vehicle, or gold.
Home Loan
15–30 years tenure, low interest
Vehicle Loan
3–7 years tenure
Gold Loan
Quick processing
Loan Against Property
High-value loan
Advantages
- • Lower interest rates
- • Higher loan amounts
- • Longer repayment period
Disadvantages
- • Risk of losing asset if loan is not repaid
Unsecured Loans
No collateral required. Approved based on income & credit score.
Personal Loan
For emergencies & needs
Education Loan
For higher studies
Credit Card Loan
Short-term borrowing
Business Loan
For business growth
Advantages
- • No asset required
- • Quick approval
- • Flexible usage
Disadvantages
- • Higher interest rates
- • Lower loan limits
Other Types of Loans
Short-Term Loan
Repaid within a year
Long-Term Loan
Repaid over many years
Fixed Interest Loan
Interest remains constant
Floating Interest Loan
Rate varies with market