A loan is the most fundamental banking product — the bank lends you money, and you pay it back with interest over a set period. Loans come in many flavors: personal loans, home loans, car loans, education loans, business loans, and gold loans.
Two main types: secured loans (backed by collateral) like mortgages and car loans, and unsecured loans (no collateral) like personal loans and credit cards. Secured loans carry lower interest rates (7-10%) because the bank can seize the asset. Unsecured loans are riskier for banks, so rates are higher (12-24%).
India's total bank credit exceeds Rs 170 lakh crore. Globally, banks hold over $100 trillion in outstanding loans. The lending process involves application, credit assessment, approval, disbursement, and repayment through EMIs. The most critical factor in loan approval: your credit score (CIBIL score in India, FICO in the US).