Loans

Like credit, a loan is a debt that has to be repaid over a period of time. There are usually fees attached to the loan and the lender charges an interest rate. As an educated consumer, you would shop around for a loan.

There are many types of loans, for instance, there are loans

to be used for a specific purpose, e.g. educational loans
with fixed rates, variable rates and adjusted rates
with different loan periods
with different attached fees
installment versus line of credit

So why bother getting a loan? Obviously because you don't have the finances currently available for some purchase. Your choice is to get a loan (or use credit card) or wait until you have saved enough. Not many individuals have ready cash to pay for their college tuition.

Thinking of buying a car? My bank has new and used auto loans for as low as 4.99% APR *. If you read the fine print it probably includes "your actual rate may vary." Often, the actual rate you are offered is influenced by the lenders estimation of your ability to repay the loan. The lender usually consults a credit reporting agency to get your credit score.