Ans. A loan is a form of debt incurred by an individual or a company. The lender- typically a bank or financial institution advances a certain sum of money to the borrower. The borrower agrees to certain finance charges including the interest rate, repayment date, and the loan tenure and signs an agreement to ensure repayment.  Most lenders also require collateral for providing loans. If the borrower fails to repay the loan or breaks the terms of the agreement, the lender has the right to use the collateral to recover the loan amount. These types of loans are called secured loans.