Meaning and Examples of Loans in English

A loan is a sum of money that is borrowed and is expected to be paid back with interest. Loans are commonly used for various purposes, such as purchasing a home, starting a business, or covering educational expenses. The key components of a loan include the principal amount (the original sum borrowed), the interest rate (the cost of borrowing), and the term (the duration over which the loan must be repaid).
Example 1: John took out a $10,000 loan from the bank to buy a car. He agreed to repay the loan over five years with an annual interest rate of 5%.
Example 2: Sarah received a student loan to pay for her college tuition. She will start repaying the loan after she graduates and finds a job.
Example 3: A small business owner might take out a loan to purchase new equipment. The loan helps the business grow and increase its revenue.
Loans are a fundamental aspect of personal and business finance, enabling individuals and organizations to achieve their goals by providing immediate access to funds.