What Is Loan? – Definition, Types, Benefits In English

If you want to take loan from bank and want to know what is loan (What is loan in English)? And how to take, then this article is going to prove beneficial for you. Often you must have heard about the loan from the mouth of the people and they apply for the loan in the bank and after the application is approved, they also get the loan money.

So mainly understand this and know what is a loan? Loan is a form of loan given by any person or any institution. A lending corporation can be a financial institution, a government entity that provides a loan to an individual borrower. Which he later repays every month according to his earnings and ends the loan taken for himself by paying some extra money.

What Is Loan In English

If there is more than one child, then the parents have to make a lot of effort for the good education of each child. This is the reason why loans help such people in this matter. There are many such needs which are not possible for a common man and are fulfilled by the loan from the bank, but do you know how many types of loans are there.

What Is Loan?

When a person or company takes a loan from the bank to fulfill his personal work and which has to be repaid later with some interest, then we call it a loan. There can be many reasons for taking a loan and the loan taken according to that reason is also given in the same way.

For example, if you want to buy a house, then the money taken for it will be called a home loan. But if there is any personal work, then people take personal loan for that.

Definition Of Loan

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When a person, business, state or country takes a loan from a particular bank and within a particular time, with the amount of that loan, the interest on it is paid, then it is called a loan.

At the time of taking the loan, the bank agrees with its customer i.e. the person taking the loan, the company, the country that what is the interest rate per year for that loan and within how much time the amount is to be repaid.

Before giving the loan, the bank is satisfied that whoever it is giving the loan, whether it is capable of returning the loan amount or not.

For this, the bank takes information about the amount of property with the borrower and also tells that if due to any reason the loan amount is not deposited within the time interval, then his property will be confiscated. Similarly, if someone buys a car and after paying a few more months, he is not able to pay the money, then the bank confiscates his car and recovers his money.

Type Of Loan

When someone goes to the bank and applies for a loan there, the first thing that the bankers ask is what kind of loan do you want. This means that the type of loan as required. It is not that you have asked for a loan and the bank will give you the same amount, but you will have to specify the type of loan as per your requirement.

types of loan in english

1) What Is Personal Loan

Personal loan is a loan given by the bank to a person to complete his personal work. It is a personal loan as well as an unsecured loan. The interest rate in this is higher as compared to other loans. Most of the banks offer personal loan facility to their customers.

The person taking the money from the personal loan can be used for any work. Suppose it can be used for home, for wedding expenses, for going somewhere, if you want to get fridge, washing machine. Taking a personal loan is quite easy as the process is completed very easily. Personal loan is used to fulfill all its small and big tasks.

Nowadays, often calls or messages keep coming from the bank to take a personal loan. But before taking a personal loan, definitely take a good information about the interest involved in it because I have already told that the interest rate is high in it. You should go for a personal loan only when you have a dire need or an emergency.

2) Credit Card Loan

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Suppose you have already taken home loan and car loan and suddenly you need money, then in this condition credit card loan can act as relief for you. Very few people know about this. In a way, it is better than a personal loan because it is very easy to get. In this too, like a personal loan, the amount taken within a time period has to be filled with interest.

When you intend to take a personal loan, you have to submit bank statement, Form 16, pay slip, KYC and other documents for this. Because of these things, it takes some time to get near it. But if we talk about credit card loan then in this when you apply for it after talking to its customer care then money gets in your account in one to two days.

The interest rate charged in this is much lower than that of a personal loan. That is why when it comes to credit cards, it is more beneficial than a personal loan. The thing to keep in mind and note in this is that with the reducing rate i.e. amount decreasing in personal, the interest rate also decreases, same credit card gets flat rate.

3) Home Loan

Who does not wish to have a house of his own? It is the dream of almost every person to have his own house. But there are many people who do good job or business and earn money but are not able to buy a house. In this case, they have to turn their attention to the bank.

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The bank approves home loans to such needy customers on the basis of monthly installments. In this way the home loan amount is huge and which is kept for a long time to be repaid along with the interest. People have to pay all their money in the form of monthly installation in 20-30 years.

Home loan is very beneficial for middle class people who are not able to build a house for themselves even after working for life. Such people have dreams and fulfill that dream with the help of it.

4) Business Loan

The population of our country India, Brazil, USA, Germany, UK are high and this is the reason that the problem of unemployment is also very much. Despite being educated and well educated, one does not get a job because there are not so many industries.

Now you must have understood that the money we get from the bank to start business is called business loan. When you apply for this, first of all you have to prepare a good plan.

The B bank you go to will ask you the plan of the business you are going to start so that they will be satisfied that your plan is good. Make sure to do cost estimation of your business so that there is no confusion while telling about the amount.

Banks will take complete information about your business if they are satisfied that your business will actually make profit and will return the money by a certain time only then the bank will be ready to give you the loan.

5) Car Loan

Who doesn’t want to have their own house? If there is a car in the house, if all this happens then the family also seems complete. People’s first dream is a house but the second dream is of a car in the house.

Everyone wants that if they go out of the house, then the family members should go together. But it is a very difficult task for the working people to buy a car. To fulfill this dream of the people, the bank provides car loan facility.

All banks give the opportunity to buy a car to the people working in this way. If you also have a desire that you also have a car in the house, then this dream of yours will also be fulfilled and you have to fulfill their conditions by going to the bank for this.

Then the monthly fee for the car has to be paid in a stipulated time. You do not need to take tension in this because the interest rate in this is very low.

6) Property Loan

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There are many aspects of life. To improve these aspects and to improve their standard of living, people earn money to buy land, build houses, collect jewellery, buy vehicles. In this way, you buy everything comfortable to live your life in the best possible way. Slowly a very good property gets built.

What’s the matter of trouble comes anytime. When trouble comes, it comes from all around. At such a time, relatives and relatives do not help and retreat. Sometimes we need so much money that it may take us many years to earn. In this case, we are left with only one option and that is our property.

When we take money from the bank by mortgaging our house, land or farm, it is called property loan. When you go to the bank for this, they get an idea of ​​the value of your entire property. After that let’s see whether you will be able to repay their amount or not.

Based on this, they decide the loan amount. For your information, let me tell you that 50-70% of the amount is given on the basis of the property. In this, you are given a maximum time of 15 years to repay the amount taken.

7) Project Loan

This also comes in the same category about which very few people know. Just as people take money from the bank to start a business, in the same way some people take money to complete their project, it is called project loan.

But in this the bank gives money very hard. When the bank fully feels that the project is profitable, only then it lends money.

8) Education Loan

After finishing high school, people want to make their children doctors, engineers. It takes a lot of money to do all such courses. If there are more than 2 children in a house, then it is very difficult for the parents to provide such education to every child.

For a man who comes in the middle class, this is a condition for chewing iron gram. The money which is given for the education of the children in the form of loan to pay the fees of the students studying and which after completing the studies, the same student pays the bank after getting the job, it is called education loan.

All banks approve and give money to children for education. For this a guarantor is required, in whose responsibility this loan is passed. As a guarantor, the father of the student or any other person who is his relative and who has an account in the same bank.

9) Gold Loan

Nowadays, we often see advertisements related to gold loan on TV. In this it is told how you can borrow against your gold when needed and get your gold back after paying off the loan amount.

Our civilization is such where there are more middle class families. Gold is very much in trend in jewellery. In any function, party or program, women prefer to wear gold only. In marriage, jewelry is made especially for the girl and jewelery made of gold is given.

In this way it is a property which is there in almost every family. Whenever people need money and do not see any way, then in this situation the bank has given a safe way to the people through this scheme, so that people can go directly to the bank and deposit their gold and take money in return for it.

Huh. Earlier, he used to go to someone who used to give money by pledging gold and there was a lot of risk in it. The bank has made it convenient for everyone.

loan definition

Loan FAQ

What is the definition of loan?

A person, business, or country, especially one who has borrowed money from a bank and repays the loan amount with interest within a specified time frame, is called a loan. Bank provides money to a person, business, or state and country in the form of loan for a specified period.

How many types of loans are given?

Personal Loan
Gold Loan
Loan Against Securities
Property Loan
Home Loan
Education Loan
Vehicle or Car Loan

Documents Required for Personal Loan?

proof of identification
Proof of residence
Proof of Income (Salary slip of last 3 months as well as bank statement of 3 months
passport size photo
mobile number

Now you all know about everything related to What Is Loan. If you want to know more about loan then comment below I will help you a lot.

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