3× cost at 25% APR
What is a loan?
A loan is an amount of money borrowed from a lender that you agree to repay over time with interest. Secured loans (mortgages, auto loans) use collateral to get lower rates; unsecured loans (personal loans, credit cards) rely on your creditworthiness alone. Always compare APR — the total annual cost including fees — not just the monthly payment or stated rate.
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Try calculatorKey takeaways
04 · ideas- A loan is money borrowed that must be repaid with interest
- Secured loans (lower rates) require collateral; unsecured don't
- At 25% APR, $10,000 costs $18,000+ to repay over 5 years
- Always compare APR — not just the monthly payment
Illustrative chart
$200k · 7.5% · 30yr
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A loan is money you borrow with a promise to repay it — plus interest — over an agreed period.
The three parts of every loan:- Principal — the amount you borrow
- Interest — the fee the lender charges (a percentage of what you owe)
- Term — how long you have to repay
- Monthly payment: $313
- Total repaid: $11,268
- Interest paid: $1,268
- Secured: backed by something you own (home, car). Lower rates because the lender can take the collateral if you don't pay.
- Unsecured: backed only by your promise to pay. Higher rates because the lender has no fallback.
- Mortgage (home purchase) — secured, 6–8%
- Auto loan — secured, 6–12%
- Personal loan — unsecured, 10–20%
- Credit card — unsecured revolving, 18–29%