Loan

A contractual arrangement in which one party (the lender) provides another party (the borrower) with money or other fungible assets, with the obligation to return the same amount, type, and quality within an agreed period. A loan may be either interest-bearing (with compensation) or interest-free (without compensation). In everyday language, the terms “loan” and “credit” are often used interchangeably, but in financial and legal contexts there is a distinction. Credit is granted only by a bank or financial institution and is always interest-bearing, while a loan may be granted by any party (an individual or institution) and does not necessarily involve interest.