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Simple English definitions for legal terms
loan
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A quick definition of loan:
A loan is when someone gives you money and you promise to pay it back later. It's like borrowing money from a friend, but instead you borrow it from a bank or another person. You have to pay back the money you borrowed plus extra money called interest. Sometimes you have to give something valuable, like your car or house, as a promise to pay back the loan.
A more thorough explanation:
A loan is when one person or organization agrees to lend money to another person or organization. This means that the borrower will receive a certain amount of money and will have to pay it back with interest over a period of time.
For example, if you want to buy a car but don't have enough money, you might take out a car loan from a bank. The bank will give you the money to buy the car, and you will have to pay it back over a few years with interest.
Loans can have different terms, such as the amount of money borrowed, the interest rate, and the length of time to pay it back. Some loans also require collateral, which is something of value that the borrower puts up as security in case they can't pay back the loan.
Overall, loans are a way for people and organizations to get the money they need to make big purchases or investments, but they come with the responsibility of paying back the borrowed money with interest.