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Loans are a fundamental building block of personal and commercial finance, providing capital that enables both individuals and organizations to make large investments in items ranging from real estate to vehicles, education, and growing a business. The most common types of loans include mortgages, auto loans, student loans, personal loans, and business loans such as small business administration loans and lines of credit.

Mortgages, issued by banks and mortgage lenders, allow individuals to finance real estate purchases over long repayment periods, typically 15 or 30 years. Mortgages require a down payment and involve interest fees on the loan balance, front-end costs like origination fees, and back-end costs like prepayment penalties for early payoffs. Auto loans help finance new and used car purchases, also issued by banks and creditors for 2 to 6 year terms. Student loans, funded both federally and privately, provide tuition funding for undergraduate and graduate degrees, with varied options like income-based repayment plans.

Personal loans allow individuals to finance a variety of expenses like medical bills, vacations, and consolidating other high-interest debt over 1 to 7 years. Small business loans and lines of credit fuel expansion for commercial enterprises, funding inventory, equipment, hiring, marketing - any operational or growth needs a business has. Small business administration (SBA) loans back riskier ventures that normal banks won't finance.

To receive loan approval, both personal and business borrowers must meet eligibility requirements based on credit history, income levels debt-to-income ratios, and collateral assets. Interest rates can be fixed or variable, where the rate fluctuates over the life of the loan based on overall market conditions. Costs incurred when taking out loans include origination/application fees, closing costs, and annual account or maintenance fees.

With loans playing such a key role in both consumer and business finance, it’s critical to research all options and terms before committing to a lending product or agreement. Taking the time to compare interest rates, fees, and other costs across multiple banks and online lenders can save thousands of dollars over the full repayment period. Consulting financial advisors for guidance can also help prospective borrowers make the soundest borrowing decisions for personal situations.