Loan

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A loan is money lent by a lender to a borrower. The lender will almost certainly charge interest on the loan, which means the borrower has to pay back the principal of the loan plus the interest over an agreed period of time. A loan to buy property is known as a mortgage. A loan that is backed up by collateral is called a secured loan, and a loan that is not backed up by collateral but is basically given on the strength of someone's dependability is called an unsecured loan. Banks make a lot of their revenue from making loans. See also Credit Union, Nonrecourse Loans, Recourse Loans, and Savings and Loan Associations (S&Ls).