lending

Lending is when a person, bank, or institution lends money to someone else with the agreement that it will be paid back, usually with interest. The lender provides funds for various purposes—like buying a home, car, or funding a business—and expects the borrower to repay the amount in installments over time. Interest serves as a fee for the service of lending money, compensating the lender for the risk and opportunity cost. Proper lending decisions depend on assessing the borrower's ability to repay and the terms agreed upon in the loan contract.