A loan is an agreement where one party, usually a bank or financial institution, gives money to another party, often an individual or business, with the expectation that it will be paid back over time. The borrower typically pays back the loan in installments, which include both the original amount borrowed and additional fees called interest. This helps the lender earn money while providing the borrower with the funds they need. Loans can be used for various purposes, such as buying a home, starting a business, or paying for education. Different types of loans exist, including mortgages, personal loans, and student loans, each designed to meet specific financial needs.