A loan is lending money to a person or an enterprise in need. The amount is lent at a set interest rate under a documentation or a receipt entailing all the transaction details including the maturing amount indebted. The repayment of a loan can be modified at times depending on the relationship between lender and borrower. In a legal loan, all the details have to be mentioned on a contract basis, putting the borrower in an obligatory position to certain rules and curfews named as loan covenants. Listed below are the various kinds of loans.

• Open-ended loans
  These are loans that can be borrowed repeatedly. Credit cards and lines of credit come under these loans. You can borrow only one amount at a time and there is always a cap for it. This cap can be used fully or partially, depending on your requirements. Every purchase through the credit card decreased the available credit limit. When the repayment is done, the limit increases as well. If the repayment is not done on time, there is always an interest rate attached to the amount used as per the number of days.
• Closed-ended loans
  These loans cannot be borrowed after repaying. The balance of loans reduces once you make the payments. There is no available balance on a closed-ended loan. If you want more loans, you must reapply for a closed-ended loan with the set processes followed. The closed-ended loans include auto loans, mortgage loans, student loans, appliance loans, and payday loans.
• Student loans
  These loans are offered to students to help them overcome the burden of high costs of higher education. The two main types of student loans are federal loans and private loans. Federals loans are relatively better when you calculate the interest rates and the repayment terms.
• Personal loans
  This looks very lucrative for impulsive buyers. If you already have a loan repayment left, such a low interest rate personal expense loan is viable to people by transferring the amount to repay the outstanding debts. Personal loans will only validate your credit history.
• Mortgage loans
  The banks allow borrowers to get assets like a home, which they can’t pay on a down payment or as ready cash. Mortgage is always tied to your home; hence, if you miss on repayments, there is a high chance of your house being recalled and you become homeless.
• Auto loans
  These loans assist a borrower to get a vehicle, and similar to a mortgage loans, you lose the car if you miss the repayment. This is usually dealt by a bank or a car dealership, but always make a note of the higher interest rates tied up with car dealership even if it sounds easy.
• Secured and unsecured loans
  If a borrower misses a repayment then the lender can take possession of any of their assets to cover the repayment loan. Secured loans have lower interest rates than unsecured loans. The assets under possession will have to be documented to clarify the value of the same. Unsecured loans are difficult to get and have a higher interest rate. This is based on your credit history and the salary you earn. If you miss a repayment, the lender has the rights to obstruct all ways for you to borrow money.
• Loans for veterans
  There are lending programs arranged for veterans and their kith and kin. This was introduced by the Department of Veterans Affairs. With this, home loans taken do not lend money from the administration themselves. They will sign for you and acts as a member of your family, helping you earn more amount but with a very low rate of interest.
• Conventional loans
  This is tied to the mortgage loans but are not issued by federal government agencies like the Federal Housing Administration, Rural Housing Service, and Veterans Administration. Their rules are set by Fannie Mae and Freddie Mac.
• Home equity loans
  These loans are excellent if you have equity on your home, using that equity to pay for other repayments. It’s good for renovation, paying off credit card debts, student loans, etc. These loans use the borrowers’ home for documentation and consideration on rate of interests are there, making it more viable than credit cards. They must be repaid if you have plans of selling your house tied up to that equity.
• Advance-fee loans
  These loans are in fact a sham to get your money. They convince customers to send money to procure loans using phishing through websites. The so-called lender vanishes once the borrower pays a small amount to get the huge loans.
• Payday Loans (Loans to avoid)
  These loans are given for a period of two weeks with an annual interest rate of 400%. These are processed in 24 hours and available in any stores that sell financial services.