What is a Loan?

An amount of money we borrow from banks or financial institutions such RRBs, NBFCs, MFIs, etc. or someone we know that is taken for:

A loan is money that we borrow from a bank or financial institution with a purpose and to be returned over a period.

A loan needs to be repaid along with interest within the mentioned timelines to avoid penalties and legal procedures.

Here are some advantages and disadvantages we must keep in mind-

Advantages

Disadvantages

Immediate help to achieve goals

Can be repaid in small chunks of money

Can be risky and lead to mortgage of valuable item if not repaid on time

The immediate help may get you in habit of taking loans and debt cycle

A loan is money we borrow from a bank or financial institution with a purpose and to be returned over a period.
A loan needs to be repaid along with interest within the mentioned timelines to avoid penalties and legal procedures.

To understand how loans work, read on