What is a loan? In its simplest form it is when someone or some institution lends someone else money. There is typically interest charged on the loan and some set payback schedule. Some loans can be short term like a six month CD. Other loans can be long term like a thirty year mortgage.

Interest can be charged on a loan in several different ways. There is simple interest. An example of this would be where 10% of the loan principle (the amount that is being borrowed) is owed to the lender. So on a $100 loan you would pay the lender the $100 that you borrow and an additional $10 to cover the interest on the loan. There is also compound interest. This is when interest is charged on interest and so on. This is the way that most loans work. Interest can compound on any schedule, but it is typically monthly or continuously compounding. This type of interest is very attractive when you are the one benefiting from the interest growth.

There are several places you can get a loan. You can get a loan from a bank, credit union, credit card, hard money lender, friend, family member, etc. Loans are issued to people for many different reasons. The most common reasons people take out a loan are to purchase a house, automobile, student loan, recreational vehicle, boat, etc. There are really nice tools online for calculating loans and loan payments so you can do some