Loans – Meaning, How They Work, Types, and Features – loanmani.com

Loans are financial transactions where one party, typically a lender such as a bank or financial institution, provides a certain amount of money to another party, known as the borrower. The borrower agrees to repay the loan amount, along with any applicable interest or fees, over a specified period of time.

Here's a breakdown of how loans generally work:

1. Application: The borrower submits a loan application to the lender, providing necessary information such as personal details, income, credit history, and the purpose of the loan.

2. Evaluation: The lender evaluates the borrower's creditworthiness by reviewing the application, checking credit scores, assessing income stability, and verifying other relevant factors. This helps them dete