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 is the redistribution of financial assets over time between the creditor and the debtor.
The borrower initially receives an amount of money from the lender, which they return, usually but not always in regular installments, to the lender. This service is generally provided at cost, which are referred to as interest on debt. A loan is the type of annuity, if the amount paid periodically (for repayment and interest together) is fixed.
A debtor may be subject to certain restrictions known as loan covenants of credit agreements.
It acts 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.
No comments:
Post a Comment