A loan is a financial transaction in which one party (usually a financial institution such as a bank) lends money to another party (usually an individual or a business) with the expectation that the borrowed amount will be repaid with interest over a predetermined period of time.

Loans can be used for a variety of purposes, such as purchasing a home, starting or expanding a business, or paying for education. The terms of a loan typically include the amount borrowed, the interest rate, the repayment schedule (including the frequency of payments and the length of the loan), and any fees or penalties associated with late payments or default.

The borrower is usually required to provide collateral, such as property or a personal guarantee, to secure the loan. This reduces the lender's risk and ensures that the borrower has a strong incentive to repay the loan as agreed.

Overall, loans play an important role in the economy by providing individuals and businesses with access to capital to pursue their goals and investments.