A loan is the redistribution of money between a lender and a borrower. As a borrower, you receive an amount of money from the lender, which you will have to pay back later. This service is provided at a cost, referred to as interest, or annual percentage rate (APR).
Installment loans are loans that are repaid in equal monthly payments within a specific period of time. Installment loans come at a cost. This includes the APR (an interest rate) and the finance charge. Cars, furniture, computers or household appliances can be purchased with installment loans. Compare fixed-rate loans, where the interest rate stays the same throughout the loan term, with variable-rate loans, where the interest rate can change during the period of the loan.
Secured loans imply that the borrower offers a guarantee, or collateral, for the loan. The borrower has a claim on this collateral as a repayment source if a loan is not paid pack in cash as agreed. For example, a home mortgage is a secured loan the bank loans the majority of the purchase price of the home, but retains a lien against the home for as long as the loan is outstanding. Unsecured loans are loans that are not secured by...
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