Loans are the debts for the borrowers. When a person needs some money then he has an option to take loan from a lender. There are two parties involved in case of a loan transaction. One party is the borrower and the other is the lender.

The borrower gets money from the lender. And the borrower has to pay back the money at a stipulated time period. Now, this service is not a free service. It is not a fee but actually it is called as interest. It is also decided in the terms of the transaction.

There are many types of loans these days. However, two main types are secured loans and unsecured loans. Under secured loans the loans provided by financial institutions that take any security as a collateral fall. And the unsecured loans do not have any security with the lender. It is based on trust.

However, these days we have a lot of different terms used under the loans category. Some of them are payday loans; bad credit loans, auto loans, bridging loans etc. The term loan is actually very wide. The effect of loan can be given in the accounts books as: It is the liability means amount payable for the borrower and is an asset for the lender, which means amount receivable. There are many financial institutions, whose sole business is to give loan facilities at the charge called as interest. The borrower is the debtor and the lender is called as the creditor. Also know about bridging loans.

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