What is a Loan?

I’m sure you’re very familiar about this term loan because even ordinary individual knows what it is. Loan is dealing with money. And when it comes to money matter we are very interested and that’s the fact, it can’t be denied.

Well, defining loan, it is a financial transaction in which the lender agrees to give to the borrower a certain amount of money with the expectation of total repayment. Contract or the promissory note is used to specify the terms of loan. The lender can ask for interest payments in addition to the original amount that has been borrowed. Moreover, the lender must also agree to the repayment terms, as well as amount borrowed, interest rate and the due dates. Lenders can also add financial interest to the missed or late payments.