A loan by definition

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as interest on the debt.

Acting as a provider of loans is one of the principal task for financial institutions. For banks loans are generally funded by deposits. For other institutions issuing of debt contracts, such as bonds is a typical source of funding.

Other types of debt include mortgages, credit card debt, bonds, and lines of credit. A mortgage is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The bank, however, is given the title to the house until the mortgage is paid off in full. If the borrower defaults on the loan, the bank can reposess the house and sell it, to get their money back.

The abuse in the granting of loans is known as predatory lending. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her.

Different Loan Types

Personal Loan
Car Loan
Boat Loan
Motor Loan
Auto Loan
Business Loan
Home Loan - Mortgage loan
Home Owner Loan
Student Loan
Consolidation Loan
and so on...

The above loans can be secured or unsecured loans. A secured loan is where some asset is pledged as collateral to ensure payment of the loan. An unsecured loan is where no collateral is required. The loan is backed up only by the promise of the borrower to repay.