Loan

A loan is a financial transaction in which one party lends another party money with the expectation of repayment. In exchange for the use of the money, the receiver (borrower) incurs a debt and must often pay interest to the lender.

The debt evidence often includes details such as the loan's principal amount, the interest rate being charged by the lender, and the due date for repayment. A loan involves the temporary reorganisation of ownership of one or more assets between the lender and the borrower.

Each of these stipulations is enforceable in a legally binding loan via the use of contractual provisions called loan covenants. Although money is the primary topic of this article, any tangible item might be loaned.

One of the primary functions of financial organisations like banks and credit card firms is to provide loans to its customers. The issuance of debt contracts like bonds is a common method of financing for different types of entities.