Loan

A sum of money that is borrowed by an individual or entity from a lender, typically with the expectation that the loan will be repaid with interest.

More Details

A loan is a financial arrangement in which a lender provides a borrower with a sum of money, called the principal, that the borrower agrees to pay back over a specified period of time, with or without interest.

Example

As a borrower, you may decide to take out a loan to finance a large purchase, such as a home or a car. In this case, you would agree to pay back the loan to the lender over a period of time, typically in monthly installments.

The loan may also come with an interest rate, which is a percentage of the principal that you will be required to pay in addition to the principal. The terms of the loan, including the interest rate and the repayment period, will be outlined in a loan agreement.

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