A loan occurs when money, property or other material goods are borrowed and expected to be repaid to the lender in the future with interest. Loans usually require a written contract between two parties.
Loans may be paid out in single, one-time amounts or be open-ended with no amounts specified. Loans can occur between individuals, corporations or financial institutions and are a major source of revenue for many. Maximum interest charges apply in most cases and are usually outlined within the loan contract.
Hard money loans are usually avoided, but are mostly used in cases in which an individual has a poor credit rating. They are ordinarily only used for short-term financing.