A loan is when you borrow money from a bank, financial institution, or lender with a promise to pay it back later. You also pay an extra amount called interest for using the money.
How Do Loans Work?
You apply for a loan when you need money for something like buying a house, starting a business, or education.
The lender gives you the money based on your repayment ability.
You repay the loan in small parts, called EMIs (Equated Monthly Installments), over a fixed period.
Types of Loans
Personal Loan
Used for personal needs like weddings, travel, or emergencies.
Home Loan
To buy or build a house.
Car Loan
To purchase a vehicle.
Education Loan
To pay for studies.
Business Loan
To start or grow a business.
Why Do People Take Loans?
To afford expensive things like homes or cars.
To manage emergencies or big expenses.
To grow a business or achieve financial goals.
Things to Remember About Loans
Interest Rate
Check how much extra money you need to pay back.
Repayment Period
Choose a time frame that suits your budget.
Eligibility
Ensure you meet the bank’s requirements to get a loan.
Credit Score
A good credit score increases your chances of getting a loan.
Loans are helpful for achieving your dreams, but always borrow wisely and repay on time to avoid financial stress!