Loan is the money lent at interest. A loan is an act in which money, property or other material goods are given from one party to another party in exchange of future repayment of the principal amount along with interests or other charges.
Types of loans
This term is used to donate those transactions that involve the transfer of property or money on the promise of repayment within a certain period of time.
Finance allows the entities like individuals, businesses and governments to use credit instead of cash to purchase goods and invest in projects.
This is simply a legal instrument that pledges a real estate or a house as security for the loan repayment.
Term loans include those loans which are paid off in equal monthly investments over a set period of time called terms. Car loans, signature loans etc are term loans.
Types of term loans
Short term loan: Short term loans are the ones which is to be repaid in a time span of less than a year. When your business is not qualified for obtaining a loan you can still acquire money from there in the form of short term loan to provide a capital for your business.
Intermediate term loan: An intermediate term loan is the one which is to be repaid in less than three years in monthly installments.
Long term loan: A long term loan is a loan which is to be repaid in a period between three to twenty five years.
Payday loan is now widely preferred owing to the advantages. There are many types of loans and some of them are even discussed above. But, payday loan is known for being one such type where you can take the amount for a short term and return it within the very next paycheck that you get. In fact, the loan is given on this contract that it has to be repaid within the next payday check you get from your job. Due to this condition, this loan is given only to those who are working so that they can easily repay it when the next paycheck arrives.
Aid and assistance in the form of loans
Loans help in the development of a nation in a myriad ways like
Small Business Administration: It is an independent agency to make loans to small businesses unable to obtain financing from private sources on reasonable terms. They also give loans to small business concerns affected by natural disasters.
Housing and Urban Development, Department of (HUD), is responsible for programs concerned with housing needs and with the improvement and development of urban areas.
Economic Development Administration: It is an agency that provides financial and technical assistance to aid the economic development of areas with high unemployment or low family income levels.