A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or takes an amount of money, called the principal, the lender and is required to return or pay an equal amount of money to the lender at a later time. Typically, the money is paid in periodic installments or partial payments in an annuity, each installment is the same amount.

The loan is usually at a cost, referred to as interest on the debt, which is an incentive for the lender to participate in the loan. In a legal loan, each of these obligations and restrictions enforced by contract, you can also put the borrower under the additional restrictions known as loan agreements. Although this article focuses on monetary loans, in practice any physical object can be lent.

Acting as a provider of loans is one of the main tasks of financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.
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