lening

Lening is a financial arrangement in which a lender provides money or other assets to a borrower with the obligation to repay the principal, usually with interest, according to an agreed schedule. The loan can be secured by collateral or unsecured, and it may involve individuals, households, businesses, or governments. The contract specifies the principal, the interest rate, the repayment schedule, any fees, and the consequences of late payment or default.

Common types include consumer loans for personal purchases, mortgages, student loans, business loans, payday loans, and lines of credit. Terms vary: fixed or variable interest, duration, amortization, and potential penalties for early repayment or late payments. The cost of borrowing is often expressed as the annual percentage rate (APR), which encompasses interest and fees.

Lenders range from banks and credit unions to online lenders and financing companies. In many countries, lending is regulated by consumer protection laws and financial regulators that require disclosures, affordability checks, and, in some cases, caps on interest rates or fees. Credit reporting and collateral rules also influence lending practices.

Benefits of lending include enabling purchases, housing, education, or business investment, and smoothing cash flow. Risks include borrower default, over-indebtedness, and interest-rate risk for lenders. Responsible lending emphasizes clear terms, affordability assessments, and transparent disclosures. Alternatives to borrowing include saving, grants or subsidies, equity financing, or supplier credits.

Across jurisdictions, the specifics of loans and consumer protections vary. The Dutch term lening simply denotes a loan and is governed by national contract law and financial regulation.