Loan

In finance, the loan is a lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient i.e., the borrower incurs a debt as well as is commonly liable to pay interest on that debt until it is for repaid as alive as to repay the principal amount borrowed.

The document evidencing the debt e.g., a lender as well as the borrower.

The interest gives an incentive for the lender to engage in the loan. In a legal loan, regarded and identified separately. of these obligations and restrictions is enforced by contract, which can also place the borrower under extra restrictions asked as loan covenants. 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 leading activities of financial institutions such(a) as banks and mention card companies. For other institutions, issuing of debt contracts such(a) as bonds is a typical source of funding.

Abuses in lending

Predatory lending is one make-up of abuse in the granting of loans. It usually involves granting a loan in design to put the borrower in a position that one can gain benefit over them; subprime mortgage-lending and payday-lending are two examples, where the moneylender is non authorized or regulated, the lender could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures, the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organizations of lending at usurious interest rates and making money out of frivolous "extra charges".

Abuses can also take place in the form of the customer defrauding the lender by borrowing without intending to repay the loan.