Loans are a fundamental financial tool allowing individuals and businesses to borrow money for various purposes, from purchasing homes and cars to funding...
A loan is a sum of money lent by one party (the lender) to another (the borrower) with the agreement that the money will be repaid, usually with interest, over a specified period.
Common types include personal loans, mortgages (home loans), auto loans, student loans, and business loans, each designed for specific financial needs.
Interest is the cost of borrowing money, calculated as a percentage of the principal amount. It's paid by the borrower to the lender in addition to the principal repayment.
Key factors include credit score, income stability, debt-to-income ratio, employment history, and the loan's term and amount. A higher credit score generally leads to better terms.
Defaulting on a loan can lead to severe consequences, including damage to your credit score, late fees, collection efforts, and potentially legal action or repossession of assets (for secured loans).