Sometimes, in life, there are things we want to do that we simply can’t afford—yet. For example, we might want to pursue higher education, but don’t have the roughly $10,000+ a year we have to shell out in order to cover the cost of tuition, books, housing, relocation costs, phone/internet/cable setup, and other miscellaneous costs. We might want to study abroad, but can’t pay for the soaring international student fees. We might want to make a large purchase—a computer, a vehicle, or a new home—but cannot put the money out up front. Or, we might want to start our own business, but lack the funds to cover all the startup costs on our own.
It is times like these we seriously consider taking out loans. A loan is money given to you on the condition that you pay the amount back, with interest, at regular, agreed-upon intervals. The original sum of money lent to the borrower is called the principal. Typically, after a specified period of time, the borrower must return the principal, plus interest. Interest is a charge for borrowing money. Interest is calculated based on a percentage of the amount owed. The interest rate can stay fixed throughout the life of the loan, or it can change at specified intervals. It all depends on the type of loan, and the institution issuing the loan.
Typically, loans can be obtained from the following institutions:
- Lending Agencies
- Credit Agencies