A loan is when someone gives you money that you have to repay over a period of time. There is an interest charge added on top of a loan.
If a loan is not repaid on time, there may be more charges added to it.
Interest is additional money. On a loan this is extra money you have to pay for borrowing money.
Loans can provide cash for a long or short period of time.
If a loan is for a short period of time, there may be a higher interest charge.
If a loan is for a long period, the interest charged may be lower but the total amount repaid could be higher.
Loans mean you can borrow money to help you to make a big purchase, or if you are in a difficult financial position.
A loan can be a big commitment. If you are considering taking a loan, speak to someone you trust.
Common types of loans include:
A payday loan is a short term loan. Payday loans are offered by high street shops and also advertised on the TV. These are often more expensive than other types of loans and charge a higher interest rate.
A bank can lend someone money for a long or short period of time. A bank can lend a large amount or a small amount of money.