Lenders

Lenders are institutions or individuals that provide funds to borrowers under agreed terms. They can be banks, credit unions, non-bank financial institutions, online lending platforms, microfinance organizations, or individuals in informal lending. They extend credit for consumer, business, real estate, or other purposes. They typically earn revenue from interest and fees and assume credit risk.

The lending process includes application, verification, underwriting, and agreement on terms (principal, interest rate, fees, repayment schedule). Underwriting assesses creditworthiness, income, debt levels, collateral, and repayment ability. Secured loans require collateral, such as real estate or vehicles; unsecured loans rely more on credit history. Terms vary by loan type: mortgage, auto, personal, business, student, etc. Interest rates may be fixed or variable; APR reflects rate plus fees. Default leads to penalties, collections, and potential loss of collateral.

Regulation and oversight: lenders are subject to licensing, consumer protection laws, disclosure requirements, and capital/liquidity standards for larger institutions. Different jurisdictions set usury ceilings and disclosure rules. The market includes traditional banks, credit unions, and fintech or online lenders, sometimes subject to updated regulations. Lenders affect liquidity and credit creation, influence monetary policy transmission, and face risks such as credit, operational, and liquidity risk.