A Loan Policy is a set of guidelines that financial institutions, such as banks or credit unions, use to determine how they will lend money to borrowers. This policy outlines the criteria for approving loans, including credit scores, income levels, and collateral requirements. It helps ensure that lending practices are fair and consistent. Additionally, a loan policy may specify the types of loans offered, such as personal loans, mortgages, or auto loans. It also includes details about interest rates, repayment terms, and any fees associated with borrowing. This framework protects both the lender and the borrower by clarifying expectations.