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What Is a Loan?
A loan is a sum of money borrowed from a financial institution or lender that must be repaid over time, usually with interest. Loans can be categorized into two main types: secured loans and unsecured loans.

Secured Loans are backed by collateral, such as a house or car. This reduces the lender’s risk and often results in lower interest rates. Mortgages and auto loans are common examples.
Unsecured Loans do not require collateral but typically come with higher interest rates. Credit cards, personal loans, and student loans fall into this category.
Types of Common Loans
Personal Loans: These versatile loans can be used for various purposes, such as medical bills, home improvement, or debt consolidation.
Mortgage Loans: Used specifically to purchase real estate, mortgages usually have lower interest rates and longer repayment terms.
Auto Loans: Designed for purchasing vehicles, these loans often come with fixed monthly payments.
Student Loans: Offered to students to help cover education costs, these loans may have flexible repayment plans based on income.
Business Loans: Used to start, expand, or improve a business, these loans often require detailed financial planning.