A loan is a kind of debt. Like all material things which can be lent out, money can also be lent and that we focus here. A loan entails the redistribution of financial assets over time, between the lender and the borrower. Initially the borrower receives an amount of money from the lender, is being paid back in regular installments or rarely in full to the lender. For providing this service borrower has to pay a cost, referred to as interest on the debt. There are certain restrictions to the borrower known as loan covenants under the terms of the loan. Bank loans and credit is the main way to increase the money supply in a society. Legally, a loan is a contractual promise of a debtor to repay an excess sum of money in exchange for the promise of a creditor to give a lesser sum of money according to period of loan. There are many types of loans like small business loans, Secured loans, unsecured loans, consolidation loans, personal loans, reverse mortgage loans, mortgage loans, credit card loans, pay day loans and so many more to go. Personal loans can be availed for any reason like for higher education, for a marriage in the family etc., whereas through consolidation loans the consumer will be able to consolidate all the loans into one single loan.