A person or body that provides another with a sum of money (loan) is called the creditor and the person borrowing the sum is called the debtor; this is a legal contract between the lender or creditor and the borrower or debtor. Any material item can be lent but this article focuses exclusively on those involving the lending of money. The period a loan will run generally depends on the financial circumstances of the borrower but normally the longer this period, the more it will cost; whilst it is possible to make 3 or 6 monthly repayments, the usual time period is one month.

The debt is repaid but an interest charge is added for the service being provided and the method by which the lender is compensated. Although not seen as much these days one type of financial agreement ensures that the first payments made to clear the debt are in fact just the charges on the sum owed. Others will repay the debt in equal installment with the interest as part of this amount.
Most of the time, this is the only contact the majority of people have with financial companies and it is just one of many roles they have; although this is the most important. Credit and bank loans are a quick and easy way for anyone to increase their cash flow with only minimal effort; other ways to raise capital are available but none as easy as this.
Long term financial arrangements designed for individuals and companies to buy real estate is called a mortgage but it can only be used for this purpose. The financial institution is given security however; in this case the title to the house, until the mortgage is paid off in full. With this type of loan, should the borrower fail to make payments on the loan or default, then the bank or other financial institution has the right to sell the property; whilst they can reclaim money owed immediately this way, they may also decide to retain the property until a later date.
Even small loans can be secured but this generally only happens when a person has a poor credit history which could be the case of a person buying a car; where the car becomes the security for the money lent to the borrower. Whilst secured loans can last a considerable time, this is usually as long as it remains possible for the finance company to reclaim costs should they need to sell the item; for cars, this very rarely extends beyond five years.
Financial companies organize unsecured loans everyday although many people do not even realize that is what they are being provided with; this can include the credit card, personal arrangements, bank overdrafts and other forms of credit. Typically, interest rates on credit cards or store cards will be the highest but all unsecured credit rates will of course vary from one lender to the next.
There are many names for it but predatory lending is the most common; used when a company places pressure on a person to use their services in order for the company to have a financial hold on that person. Credit card companies in many countries are often accused of a similar practice where they lend money at very high interest rates and make money out of frivolous extra charges. Take a step back before you sign any financial agreement.