What is a loan?

In general terms, a loan is a type of debt that has to be paid back to the financial institute that the money was borrowed from but with interest. Normally, the loan is paid back in monthly installments with the interest added on. The borrower must conform to the repayment terms stated in their loan contract as late payment or failure to pay may result in heavy financial penalties.

There are many loans available which this loan guide will talk about later but the two main types of loans are secured and unsecured. A secured loan is taken out by securing an asset such as a house against the loan.  Unsecured loans are totally the opposite where no asset is secured against the borrowing.

On the market today, there are 100’s of types of loans available for people in different situations and it is vital that people know how to borrow responsibly. This guide will help to understand the different types of loans available and the implications involved when applying for a loan.