Lender

Short Answer
A lender is an individual or institution that provides funds to a borrower with the expectation of being repaid, typically with interest, over an agreed period.

Lender

Definition

A lender is a party that offers loans to borrowers, expecting the repayment of the principal amount along with interest. Lenders can be banks, credit unions, peer-to-peer lending platforms, or private individuals. The lending process involves assessing the borrower's creditworthiness, determining loan terms, and managing the repayment process.

Lenders take on risk when providing loans, as there is always a possibility of borrower default. To mitigate this risk, lenders conduct thorough evaluations of borrowers' financial health, credit history, and the purpose of the loan. Interest rates charged by lenders compensate for the risk taken and provide a return on the funds lent out.

Lender

Examples

  1. A bank providing a mortgage to a homebuyer.
  2. A credit union offering a personal loan to a member.
  3. An online peer-to-peer lending platform facilitating loans between individuals.

Lender

Further Reads

Further Reading:

  1. How Lenders Work - Investopedia
  2. Types of Lenders - The Balance
  3. Understanding Lending Practices - Bankrate

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