What is a loan? What does loan mean?

When we need financial help, at first the word "loan" comes to our mind. Loan is now on of the common facilities provided by a financial institutions. Bank and other Non-banking financial company (NBFC) provides many type of loan for the people. There are many of you who may want to take a loan, but do not understand what a loan is! So, now I'm writing about loan by which you can understand and get general knowledge about loan. To get all information read the full post.

What is Loan?

The meaning of loan here is that a wealthy person provides money or an asset to another individual. It is the largest primary financial product of a bank or Non-banking financial company (NBFC) that the company offers to the common people.

You may have many messages or calls where you are told – do you really need a loan? Do you want to take a loan now? Take loan from us etc. You get very irritated by these calls or messages.

When we hear the word loan, the word of bank comes to our mind first because nowadays we get any financial benefits from the bank. In simple terms, a loan can mean anything, when it is only in terms of money, it is a loan. Here when you borrow money from someone else you have to pay it back with interest.

Again you can think that one person lends some money, property or some other asset to another person who is in need of money. Now when the borrower returns that money in the future, he will have to repay that money, interest and finance charges.

Safe Institution for Taking Loan

Being a financial matter, one must be careful about taking loans. So at first anyone have to select a safe institution before taking a loan. Bank is obviously a safe financial Institution for Taking Loan. Because the only bank is a financial institution where you can repay the loan with interest. Therefore, to take a loan these days, you have to contact the bank directly. Banks are very secure and can provide you loan quickly.

Another important thing is that the loan stands by your side and helps you in times of danger and if you are unable to repay the loan, you may face a lot of difficulties.

The three main components of loan

The three types of loan components are-

• Principal or what you are borrowing.

• Rate of interest or interest rate

• Duration of the loan or when the loan was taken

Capital/Principal

When you take a loan from a bank or financial institution or a person, the amount of money you are taking is the principal amount. That is, the amount of money you have borrowed.

Interest rate

It is an amount that gets attached to the capital over time. It can also be said that no one will return the loan to you without interest, so the amount that is returned with the principal amount t is called the rate of interest.

Duration of the loan

When you give someone a loan, he has to pay back the money, but he doesn't give you a fixed date on which the money will be returned. But he must give you a date by which he has to return your money. That date is called the duration of the loan.

Types or Categories of Loan

Now we will know about the loan procedures of different banks and other Non-banking financial company (NBFC). Different commercial banks or financial institutions offer different types of loan facilities to customers. The facilities of different types of loans are different. Banks or Non-banking financial companies (NBFC) generally provide 6 types of loan facilities. These are-

1. Personal Loan
2. Home loan.
3. Education Loan
4. Business loan
5. Salary Loan
6. Car loan

Personal Loan

Individuals can take this loan for their own needs. Here you can take a maximum loan of 2 lakh or more. But in this case you must be self-reliant.

Based on the required documents, you can easily get a loan from the loan provider. Which you have to pay in monthly installments.

Home Loan

You can take a large loan for building a house. In this case, a maximum loan of 2 crore dollars is available. This will greatly reduce the initial cost of building your home.

Business Loan

Starting a business requires capital. And you can arrange that capital through business loans. Banks generally provide loan facilities ranging from 50 thousand to 2 million dollars to business entrepreneurs.

Car loan

There is a lot of demand for buying cars like daily necessities. There is no substitute for a car to avoid traffic jams and live a beautiful life. However, buying a car in a hurry is not an easy thing to do. But fear not. You can also take car loan for buying a car by showing the necessary documents.

Education Loan

Nowadays education costs a huge amount of money not only for school fees but also for private coaching fees. Besides, if the student is a candidate for any special exam, like S-S-C, H-S-C, admission, then the parents have to pay a hefty sum.

Therefore, Dutch Bangla Bank issues education loans to relieve students from all the expenses. Also known as student loan. 

Salary Loan

Various banks and other financial institutions provide salary loans to employees. Applicant must be between 18 to 60 years of age. Also should have an account in the concerned bank or institution.

Conclusion

Getting a loan is very easy now a days. And in case of take-over loans from other banks, there is no additional fee to be paid at different banks.

You can easily avail loan by showing specific documents for specific sector mentioned above. If you have any question about this post you can comment in our comment box. Please like our Facebook Page🚩 to gate more important informations and update.