What is loan? Loan is sort of debt which can involve the collateral as the guarantee of the money lent by the lender. At first the borrower will receive some amount of money from the money lender whether it is bank or any other money lender like payday loans. Then the borrowed money will be paid in periodic installment payment to the money lender. This type of facility will be given with certain or additional expense which called as interest rate to the debt.
There are some types of loan offered by the financial institutions such as secured loan and unsecured loan. Let us find the difference by describing the definition of those loans one by one. Secured loan is type of loan which the borrower puts his or her economic belongings or assets like house or car as the collateral. As the opposites of secured loan there is unsecured loan which lends some amounts of money without any collateral. Besides those two types of loan, there are some more type of debt which can be called as loan. First we have demand as the short term of loan which can be called for payment at anytime (without any fixed date payment). Demand loan can be secured or unsecured loan. Next we have subsidized loan as the loan with reduced interest by a hidden subsidy. In short subsidized loan is the loan which the interest rate is artificially made very low or even zero.