A loan is a sum of money that one party, usually a bank or financial institution, lends to another party, often an individual or business. The borrower agrees to repay the loan amount, known as the principal, along with interest over a specified period. Loans can be used for various purposes, such as buying a home, financing education, or starting a business. There are different types of loans, including personal loans, mortgages, and student loans. Each type has its own terms, interest rates, and repayment schedules. Borrowers should carefully consider their financial situation before taking out a loan to ensure they can meet the repayment obligations.