A loan can be availed by anyone to a loan-seeker. Generally, the formal loans are given by the banks and licensed financial institutions and the informal loan could be transacted within close acquaintances or within the open loan market. The rates of interest vary on a case to case basis, depending on several factors. Several banks, companies or money-lenders have a policy of soft-loan for their employees or people who they prefer. Such loans either don't have an interest element or have it lower than the regular market rate. Loans as these are known as preferential loans.

A preferential loan can prove to be instrumental in terms of purchasing a house as it attracts lesser liability against the new asset earned.