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Definition Loans: All info about the loan

The term loan is certainly known on the one hand many consumers, but on the other hand, there are quite citizens who can not really imagine something. The synonym for loans, namely the credit, should say something to every consumer. Colloquially, and also in communication with their customers, banks usually use the term credit, while a loan is often used when it comes to legally clear contracts.

The core feature of any loan is that it is a money lending so that capital is lent from one party to the other.

The core feature of any loan is that it is a money lending so that capital is lent from one party to the other.

In its basic function, the loan has existed for several centuries, because the money is given for example by rich people to poorer workers, was already common in the 18th century.

More than 95 percent of all loans are provided by the banks

Nowadays, it is relatively rare for private individuals to lend money, even though the trend towards so-called personal loans has again increased somewhat. However, with over 95 percent of all funds lent, it is a credit institution that provides the loan. One of the basic features of a loan is that the borrower, the recipient of the money, must repay the full amount until the end of an agreed term. This repayment is, in addition to the payment of interest also agreed interest, the primary obligation that each borrower has. The main obligation of the lender, on the other hand, is to make the agreed loan amount available in good time on the terms agreed.

Numerous forms of loans

Numerous forms of loans

 

In practice, there are now many loan types and variants that are provided by the banks. The most frequently used types of loans are above all the installment loan, the real estate loan or the repayment credit. In addition, there are many more specific loan options, such as the car loan, the loan for self-employed or even the home loan. The terms and conditions that a loan contains are usually recorded in the so-called loan agreement. There are also the key data about the loan, for example, who lenders and who is the borrower.





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