💰 What Is a Loan?
A loan is a sum of money borrowed from a bank, financial institution, or lender that must be repaid over time — usually with interest.
You can use loans for many purposes like buying a home, vehicle, starting a business, or managing personal expenses.
🏦 Main Types of Loans:
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Personal Loan
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Used for any personal need (medical, travel, marriage, etc.).
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No collateral required.
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Interest rates: usually 10–20% per year.
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Home Loan
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For buying or building a house.
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The house itself acts as collateral.
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Longer repayment period (up to 30 years).
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Education Loan
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For higher studies in India or abroad.
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Covers tuition, books, and living expenses.
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Repayment starts after completing studies.
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Vehicle Loan
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To buy a car or bike.
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The vehicle is used as security until full payment.
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Business Loan
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For starting or expanding a business.
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Can be secured (with collateral) or unsecured.
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Gold Loan
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You pledge gold ornaments as security.
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Quick approval and lower interest rates.
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📊 Key Loan Terms You Should Know:
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Principal: The amount you borrow.
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Interest: The extra money you pay for using the lender’s money.
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EMI (Equated Monthly Installment): The monthly amount you repay.
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Tenure: The total time to repay the loan.
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Collateral: Something valuable (like property or gold) you pledge as security.
✅ Tips Before Taking a Loan:
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Check interest rate and hidden charges.
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Compare offers from different banks.
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Borrow only what you can repay comfortably.
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Maintain a good credit score (CIBIL) for better rates.
