agreement by which an owner of property (the lender) allows another party (the borrower) to use the property for a specified time period, and in return the borrower will pay the lender a payment (usually interest), and return the property (usually cash) at the end of the time period. A loan is usually evidenced by a promissory note. Examples are commercial, consumer, mortgage, and auto loan.
money advanced to a borrower, to be repaid at a later date, usually with interest. Legally, a loan is a contract between a buyer (the borrower) and a seller (the lender), enforceable under the Uniform Commercial Code (UCC) in most states. The terms and conditions for repayment of a loan, including the finance charge or interest rate, are specified in a loan agreement. A loan may be payable on demand (a demand loan), in equal monthly installments (an installment loan), or they may be good until further notice or due at maturity (a time loan).
There are various methods lenders use to categorize loans, both for internal control and for reporting lending activity to governmental agencies, for example, classification by maturity, industry, security, and type of borrower. Bank loans are normally classified by: (1) commercial and industrial loans to business organizations; (2) interbank loans, which are mostly federal funds transactions, from one bank to another; (3) loan participation, or loans to a single borrower shared by several banks; (4) real estate loans, which may be subdivided into construction loans and long-term mortgage loans; and (5) loans to consumers, such as auto loans and other forms of consumer installment credit.
transaction wherein an owner of property, called the lender, allows another party, the borrower, to use the property. The borrower customarily promises to return the property after a specified period with payment for its use, called interest. The documentation of the promise is called a promissory note when the property is cash.
transaction wherein an owner of property, called the lender, allows another party, the borrower, to use the property. The borrower customarily promises to return the property after a specified period with payment for its use, called interest. The documentation of the promise is called a promissory note when the property is cash.
money that is lent. In life insurance, a loan can be taken against the cash value of a life insurance policy at any time. The policyholder does not have to repay the loan until the policy matures or until the loan and any outstanding interest equals the cash value.
offer of borrowed money. Agreement for debt financing.
Example: The Wilsons used a mortgageto buy their home, a home equity loan to add a room, and an unsecured bank loan to buy new furniture.
