What is a Loan?

Loan is an amount of money or property that is given to another party for a certain time and until he pays it back interest is charged. The creditor might ask for collateral to be put up next to the load and only after that he will be granting it. The loans are usually regulated by law like what is the max amount, the minimum time until the borrower has to pay, the highest interest rate what can be charged. For example you need an X amount of money for redecorating your house, now you turn to a creditor like a bank who'll give you the desired sum.

And you have to pay back this money what you have received plus interest. Loans take different shapes and sizes from banks to persons or institutions. There are laws which regulate the granting of loans. The contract what you sign states a couple of things like what type of interest you pay which can be fixed or variable, how you'll pay back the loaner this can be in one single payment or in small monthly settlements, also the time you have available until you have to start paying you creditor back.