Loan

Topic

Financial Literacy

Definition

A loan is the act of giving money, property, or other material goods to another party in exchange for future repayment.

Description

Loans are essential for facilitating major purchases, like homes and cars, and understanding how loans work is key to effective financial management. In real-world applications, borrowers must assess loan terms to ensure manageability. Understanding loans involves learning about interest rates, repayment schedules, and loan agreements. Algebraically, loan amounts and payment terms can be modeled mathematically, aiding students in comprehending financial frameworks. A teacher might explain, "A loan is when someone gives you money now, expecting you to pay it back, often with extra money called interest later on."

For a complete collection of terms related to Financial Literacy click on this link: Financial Literacy Collection.