Loan is literally referred to the money lent from a single person or organization to another person or organization. A loan is a debt offered by an organization or individual to another one at an interest price, and proved by a note that specifies, among other items, the basic quantity of money borrowed, the interest price the lender is charging, and date of money payback.
In loan, the borrower firstly receives a quantity of funds,
called the principal, from the lender, and must spend back or repay a same
quantity of money to the lender later.
The loan is normally offered at an expense, referred to as
interest on the debt, which gives an incentive for the money lender to get
involved in the loan.
In the legal loans, every obligation and limitation is
administered by agreement.which may also spot the borrower beneath further
limitations called loan covenants.
Acting as a supplier of loan
is one of the important tasks for economic institutions such as banks
and credit card companies. For other institutions, publishing debt contracts such as bonds is a standard
supply of funding.
