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.
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