Loan is a form of debt incurred on the borrower when he borrows money from the lender which is usually a bank. The borrower pays back the money to the lender in installments. If the installment amount is the same throughout, such loans are of the annuity type. The financial institutions which offer the loan charge an additional amount along with the loan amount called the interest of the loan. Loans are basically of two types-secured and unsecured loans. Secured loans are taken against collateral like property or vehicle. In the case of mortgage loans, the property is given as the security till the loan amount is paid in full. Unsecured loans do not require any collateral, but the interest rates are quite different from that of secured loans.
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