A loan is a type of Like all debt instruments, a loan entails the redistribution of financial over time, between the and the .
In a loan, the borrower initially receives or borrows an amount of , called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an , each installment is the same amount. The loan is generally provided at a cost, referred to as on the , which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by , which can also place the borrower under additional restrictions known as . Although this article focuses on monetary loans, in practice any material object might be lent.
Acting as a provider of loans is one of the principal tasks for . For other institutions, issuing of contracts such as is a typical source of funding.