Loan
A
loan is a type of
debt. All material things can be lent but this article focuses exclusively on monetary loans. Like all debt instruments, a loan entails the redistribution of financial
assets over time, between the
lender and the
borrower. The borrower initially receives an amount of
money from the lender, which they pay back, usually but not always in regular installments, to the lender. This service is generally provided at a cost, referred to as
interest on the
debt.
Acting as a provider of loans is one of the principal tasks for
financial institutions. For other institutions, issuing of
debt contracts such as
bonds is a typical source of funding. Bank loans and credit are one way to increase the
money supply.
Other types of debt include mortgages, credit card debt, bonds, and lines of credit. A
mortgage is a very common type of debt instrument, used by many individuals to purchase
housing. In this arrangement, the money is used to purchase the property. The bank, however, is given the title to the house until the mortgage is paid off in full. If the borrower
defaults on the loan, the bank can repossess the house and sell it, to get their money back.
-Abuse in the granting of loans is known as
predatory lending. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her.
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Finance,
Personal finance*
Debt,
Consumer debt,
Debt consolidation,
Government debt*
Bank,
Fractional-reserve banking,
Building society*
George D. Sax and the Exchange National Bank of Chicago - Innovation of instant loans
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Interest-only loan*
Student loan*
Annual percentage rate (a.k.a. Equivalent Annual Rate)
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Accounts Receivable as Collateral
