A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and borrower.
In a loan, the borrower borrows or receives first payment of money, called the principal, the lender, and is obliged to repay or to repay an equal amount of money to the lender at a later date. In general, the money is repaid in installments or partial repayments to an annuity, each episode is the same amount. The loan is generally provided at a cost, namely the interest on the debt, which constitutes an incentive for lenders to engage in the loan. In a loan, each of these obligations and restrictions in the contract, which may also be the borrower under the restrictions known as loan agreements. Although this article focuses on monetary loans, in practice, any material object might be lent.
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.
In a loan, the borrower borrows or receives first payment of money, called the principal, the lender, and is obliged to repay or to repay an equal amount of money to the lender at a later date. In general, the money is repaid in installments or partial repayments to an annuity, each episode is the same amount. The loan is generally provided at a cost, namely the interest on the debt, which constitutes an incentive for lenders to engage in the loan. In a loan, each of these obligations and restrictions in the contract, which may also be the borrower under the restrictions known as loan agreements. Although this article focuses on monetary loans, in practice, any material object might be lent.
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.
