What is loan insurance? – Financial & Insurance News

What is loan insurance?

Digital lending institution SoFi, a favorite of millennials, relocating right into standard financial

A loan is something that is borrowed. While a person can borrow all sorts of things – big and small – many people associate loans with money. A loan is usually a formal agreement between a bank or financial institution and a borrower. The borrower can use the money for anything, but must be able to repay it. The terms of the loan outline how much money is being lent and how long the borrower must repay it. The money borrowed can be repaid in regular installments, but often comes with interest, so the borrower actually pays back more money than was originally borrowed. One of the most common types of loans is a mortgage, which people use to buy a house. The bank providing the loan has a lien, so the home is not owned by the owner until the loan is repaid. Secured loans, such as mortgages, are secured because the borrower provides collateral. An unsecured loan is different because the borrower does not provide any equity. Unsecured loans include amounts owed on credit cards. One needs to carefully review the terms before making any financial commitment, such as a loan. After all, a loan is actually a form of debt.