In banking terminology, the term Loan refers to a debt incurred by the act of a lender providing money or other items of value to a debtor. The evidence of a Loan is typically in the form of a note that specifies the principal amount lent, the rate of interest charged, and the loan�s repayment terms.
For example, a Loan might be used by an individual or business to obtain access to funds that they do not currently have for their personal or operational needs. The debtor can then earn or raise money over time to pay back the Loan according to the terms agreed upon with the lender. A Loan can be obtained from a financial institution or from a private source, such as a friend or relative, and items such as a car or a computer can also be loaned.Most banks will only loan money, and they will typically charge the debtor an interest rate expressed on an annualized basis that will need to be paid along with the repayment of the Loans principal amount.