UK
Loans:
A loan is a type of debt. All material things
can be lent but this article focuses exclusively on monetary
loans. Like all debt instruments, a loan entails the redistribution
of financial assets over time, between the lender and the
borrower. The borrower initially receives 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
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. Bank loans and credit are one way to increase
the money supply. Legally, a loan is a contractual promise
of a debtor to repay a sum of money in exchange for the promise
of a creditor to give another sum of money.
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