What is an interest rate?
An interest rate is the cost of borrowing money, expressed as a percentage of the loan amount. It is the additional amount the borrower must pay to the lender for using their funds. Interest rates can be fixed (remain constant throughout the loan term) or variable (fluctuate based on market conditions).
What is the difference between secured and unsecured loans?
Secured loans require collateral, such as a house or a car, which the lender can seize if the borrower fails to repay the loan. Unsecured loans, on the other hand, do not require collateral and are based solely on the borrower's creditworthiness. Secured loans generally have lower interest rates compared to unsecured loans.
What are loans?
Loans are financial arrangements where a lender provides a certain amount of money to a borrower with the expectation that it will be paid back, usually with interest, over a specified period of time. Loans are commonly used to fund various personal and business expenses.