What is a Loan?

Home
>
Loan
>
What is a Loan?

A loan is money that you borrow and agree to pay back over a set period of time with interest. The amount of money you borrow is called principal, and interest is the cost for borrowing the money. The length of time set to pay back the loan is known as the term.

It is best to get a loan only for very large purchases or in an emergency. Getting a large loan or getting many loans that you can't pay back can cause huge financial problems, because it can get very difficult to pay them back each month.

There are many benefits to getting a loan. A loan gives you the money you need to pay for something big like a house, a car, college tuition, or major home repairs when you don't have the cash to cover the purchase. Most people could not afford to do these things without loans.

Loans come in a variety of shapes and sizes each performing a different function and having different interest rates. Loan rates are variable, depending on status.

Loan repayments will depend on the amount borrowed and term. Loans are taken out with selected, reputable institutional money lenders.

Depending on the type of loan chosen you can borrow anywhere from £500 to £1,000,000 and can repay it over a period of between six months and twenty-five years.

Nowadays, it is quite easy for most people to qualify for a loan of one sort or another even if they have a bad credit history. Loans can be applied for in person, by telephone or more commonly now, over the Internet.

Loans can be used for any purpose. A loan can help you with home improvements such as a new kitchen or bathroom, that once-in-a-lifetime holiday, your dream car or repaying debts to reduce your monthly outgoings to a more manageable amount.

One of the most common types of loan is a secured loan. A secured loan is a loan which is backed by assets belonging to the borrower in order to decrease the risk assumed by the lender. The assets may be forfeited to the lender if the borrower fails to make the necessary payments. The number one asset is property which could be your home, your office, your farm or your factory.

A secured loan uses your home as security. It is suitable if you want to raise a large amount; are having problems getting an unsecured loan; or have a poor credit history. Lenders are more flexible with their underwriting, making a secured Loan possible when you may have been turned down for an unsecured loan.

A secured Loan is a loan that a lender provides on the understanding that a property is secured against the loan. This type of loan is usually provided with a lower interest rate than an unsecured loan because you will have secured your property against it.

A secured loan enables homeowners to borrow capital and offset the risk against the value of their property. This means that anyone taking out a secured loan is effectively using their property to guarantee the loan. If the borrower fails with the repayments, there could be a possibility their home is at risk.

Secured loans are normally quicker to arrange because the lender has some security to offset against the loan should you default on the repayments. In most cases this is the cheapest type of loan with interest rates on the loan a few percentage points above base rate.

The only problem with loans in general, is that they will have to be paid back.

You may freely reprint this article provided the author's biography remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

In The News:

Yahoo! News: Top Stories

Democrats criticize Obama's proposed tax cuts (AP)

AP - President-elect Barack Obama's proposed tax cuts ran into opposition Thursday from senators in his own party who said they wouldn't do much to stimulate the economy or create jobs. Senators from both parties agreed that Congress should do something to stimulate the economy. But Democratic senators emerging from a private meeting of the Senate Finance Committee criticized business and individual tax cuts in Obama's stimulus plan.

UN Security Council calls for immediate Gaza truce (AP)

AP - The U.N. Security Council called for an "immediate" and "durable" cease-fire in Gaza in a resolution Thursday night even as fighting between Israel and Hamas raged Â— with early morning airstrikes killing seven Palestinians and pushing the death toll to about 760 in the near two-week conflict.

Key panel recommends impeaching Ill. governor (AP)

AP - A key panel unanimously recommended impeachment for Gov. Rod Blagojevich on Thursday, setting up a vote that could make him the first governor to face such fate in Illinois' sordid political history. Blagojevich should lose his job for abusing power, mismanaging government and committing possible criminal acts, including federal allegations he tried to sell off a U.S. Senate seat, the special committee concluded.

Mini Dynasty: Tebow leads Gators past Oklahoma (AP)

AP - Tim Tebow gave Florida the jolt it needed, and the Gators toughed out a second BCS title in three years.

Job losses stack up as recession deepens (AP)

AP - Trying to survive a deepening recession, employers are cutting their work forces to the bone, leaving more Americans unemployed and with dim prospects of finding a new job any time soon.

Oversight panel wants better answers from Treasury (AP)

AP - Less than a month after its first report, a congressional panel overseeing the Treasury Department's $700 billion financial bailout is demanding more answers.

Petraeus: Afghan, Pakistan problems are really one (AP)

AP - U.S. policy to win in Afghanistan must recognize the poor nation's limitations and its neighborhood, especially its intertwined relationship with U.S. terrorism-fighting ally Pakistan, the top U.S. military commander in the region said Thursday.

Cheney: CIA did nothing illegal in interrogations (AP)

AP - Vice President Dick Cheney said Thursday that he sees no reason for President George W. Bush to pre-emptively pardon anyone at the CIA involved in harsh interrogations of suspected terrorists. "I don't have any reason to believe that anybody in the agency did anything illegal," he said.

Calif. court rejects lawsuit against tax increases (AP)

AP - An anti-tax group will consider new legal action after a California appeals court tossed out a lawsuit that sought to block tax increases passed by Democrats in the state Legislature, the group said Thursday.

Prosecutors: Madoff was ready to send out $173M (AP)

AP - Prosecutors said Thursday that investigators found 100 signed checks worth $173 million in Bernard Madoff's office desk that he was ready to send out to his closest family and friends at the time of his arrest last month in what is alleged to be largest financial fraud in history.

U.N. Security Council calls for immediate Gaza truce (Reuters)

Reuters - The U.N. Security Council called for an immediate ceasefire in the Gaza Strip but Israeli warplanes launched intermittent attacks on Friday.

Obama pushes stimulus, warns on recession (Reuters)

Reuters - President-elect Barack Obama warned on Thursday the U.S. economy could stay mired in recession for years without bold action and he urged lawmakers to work day and night to pass a massive stimulus plan.

Citi backs measure to help avoid foreclosures (Reuters)

Reuters - Financial giant Citigroup Inc will support a proposal in Congress to rewrite U.S. bankruptcy law to help troubled mortgage borrowers avoid foreclosure, Chief Executive Vikram Pandit said on Thursday.

Illinois panel recommends governor's impeachment (Reuters)

Reuters - A legislative committee on Thursday recommended the impeachment of Illinois Gov. Rod Blagojevich, citing widespread abuse of power including allegations he tried to sell the U.S. Senate seat vacated by President-elect Barack Obama.

Qaeda Pakistan leader believed dead: U.S. official (Reuters)

Reuters - Al Qaeda's operations chief in Pakistan and a top aide are believed to be dead, a U.S. counterterrorism official said on Thursday, in what appeared to be the latest results of a campaign targeting the militant group's leadership.

Accused swindler Madoff "warm and charming": report (Reuters)

Reuters - Some friends of accused swindler Bernard Madoff considered him a "warm and charming" man, and one of his alleged victims praised him just before his death in 2005, Fox Business Network reported on Thursday.

Obama names Virginia gov as Democratic Party head (Reuters)

Reuters - President-elect Barack Obama named Tim Kaine as head of the Democratic Party on Thursday, rewarding an early supporter with a high-profile political post even as he continues to serve as Virginia governor.

EU seeks gas supply return after deal on monitors (Reuters)

Reuters - Europe on Friday looked for a swift restoration of gas supplies, after striking a deal with Moscow on monitoring gas shipments via Ukraine that have been halted by a rancorous pricing dispute with Kiev.

UN Security Council urges immediate Gaza ceasefire (AFP)

AFP - Israel was under intense pressure Friday to end its two-week-old offensive in the Gaza Strip after the UN Security Council called for an immediate ceasefire as the death toll from the war rose past 760.

Progress in resolving gas row as Russia agrees to monitors (AFP)

AFP - Hopes for a quick resumption of Russian gas supplies to Europe were rising Friday after Russia agreed on the terms for the deployment of monitors in Ukraine.

What is a Loan?

Loan Loan