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.




                       TYPES OF LOAN

Installment Loan
When you get an installment loan, you borrow all of the money at once and repay it in set amounts, or installments, on a regular schedule over a period of time.

Line of Credit
A personal line of credit is a type of revolving credit that lets you write checks for the amount you want to borrow, up to a limit set by the lender. The credit doesn't cost anything until you write a check. Then you begin to pay interest on the amount you borrowed. Whatever you repay becomes available for you to borrow again.



                      BENEFITS OF 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.

                  
 
                       COSTS  OF LOAN

The cost of a loan is determined by the interest rate the lender offers and the length of time you take to repay. In addition to interest, a lender may charge other fees for the loan application or to check your credit. These fees are often called points.

Where to get a loan
Look for a bank or credit union that offers loans with low interest rates and fees. Remember to look for a loan with the lowest annual percentage rate. Banks and Community Development Credit Unions are the safest and most affordable places to get loans.