In finance, a loan is the transfer of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.

Borrowing money can fund a new home, pay for college tuition or help start a new business. Financing options range from traditional financial institutions, such as banks, credit unions, and financing companies, to peer-to-peer lending (P2P) or a loan from a 401 (k) plan.