A loan is money you borrow from a person or financial institution that you have to pay back after a certain amount of time with additional charges called interest. When you receive a loan, you can use the money for anything you see fit, and there will be no repercussions unless you defect on the repayment of the loan.
A loan can be in two forms, either a one-time loan or an open-ended line of credit up to a maximum amount. The most common of the two is the one-time loan, which is a specific amount received by the borrower to be repaid either by instalments or on a due date. An open-ended line of credit is a pre-approved loan that can be repeatedly collected up to a limit and then repaid even before the agreed due date.
There are two types of loans, namely, secured and unsecured loans. With a secured loan, the borrower will require a collateral property such as a car or house. This means that if you fail to repay the loan at the stipulated time, the borrower can take possession of those properties. However, an unsecured loan does not require such and is, in fact, less common and less often dictates lower loan values.
