A 'loan' is a type of debt. This article focuses exclusively on monetary loans,
although, in practice, any material object might be lent. Like all debt
instruments, a loan entails the redistribution of financial assets over time,
between the and the . The borrower initially does receive 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. A loan is of the annuity type if the amount paid periodically (for paying
off and interest together) is fixed. A borrower may be subject to certain restrictions known as loan covenants under
the terms of the loan. 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. Legally, a loan is a contractual promise between two parties where one party,
the creditor, agrees to provide a sum of money to a debtor, who promises to
return the money to the creditor either in one lump sum or in parts over a fixed
period in time. This agreement may include providing additional payments of
rental charges on the funds advanced to the debtor for the time the funds are in
the hands of the debtor (interest).
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