• A loan is when money is given to another party in exchange for repayment of the principal amount of the loan plus interest.
  • Lenders will consider a potential borrower’s income, credit score, and debt level before making a decision to grant them a loan.
  • Revolving loans or lines can be spent, repaid and spent again, while term loans are loans with a fixed rate and fixed payments.
  • Lenders may charge higher interest rates to risky borrowers.