A lender is an institution, group, or individual that loans money to borrowers for various reasons. They expect to be repaid on a specific schedule, usually with interest.
Lenders can make a lot of things possible, but you have to be sure you’re working with a reliable person or institution and that you can handle the loan. Just because somebody is willing to lend you money doesn’t mean it’s a good idea to borrow—make sure you have a solid plan in place for repaying before you accept a loan.
What Is a Lender?
Lenders enable individuals and businesses to accomplish things they wouldn’t be able to do without a loan. It could be a bank lending money for a 30-year mortgage or a person letting a small business borrow startup money on a short-term repayment plan. Whatever the specific need, a lender can grant the money to make it happen.
They don’t do this out of generosity, however; lenders expect to get repaid. For this reason, borrowers must meet certain criteria in terms of cash on hand, credit score, and collateral. They are looking for assurances that you’ll be able to repay the loan.
Once you’re approved by a lender, the terms of your loan agreement will describe exactly how the process works: how often you’ll make payments, how long you have to repay, how much interest you’ll pay, what happens if you fail to repay, and more. It’s helpful to evaluate all of those items so you’ll know what you’re getting into and how much each loan costs.
