Loaning

Loaning is the act of providing something—usually money, but sometimes an item—for a period of time with the expectation that it will be returned, often with payment or appropriate compensation. When money is loaned, the lender gives funds to the borrower in exchange for a promise of repayment of the principal plus interest. The party who lends is the lender; the party who borrows is the borrower.

Loans can be monetary or non-monetary. Monetary loans include personal loans, student loans, mortgages, and business loans, and may be secured by collateral or unsecured. Non-monetary loaning includes libraries lending books or institutions lending equipment; the borrower is obliged to return the item in good condition or as agreed.

Key terms include principal, interest rate, repayment schedule, term, and whether the loan is secured by collateral. The agreement may specify fees, prepayment options, and remedies in case of default. The process often involves application, underwriting, and approval.

Lending activity is regulated by financial authorities and consumer protection laws in many jurisdictions. Lenders may be licensed, and disclosures about terms and risks are often required. In recent decades, alternative forms such as peer-to-peer lending and microfinance have grown.

Loaning supports economic activity by providing liquidity and enabling purchases and investments, but it also creates risk of overindebtedness and defaults. Ethical considerations include fair terms and transparency, as well as avoiding predatory or exploitative practices.