LOAN
loan,n.1. An act of lending; a grant of something for temporary use <Turner gave the laptop as a loan, not a gift>. [Cases: Contracts 194.] 2. A thing lent for the borrower’s temporary use; esp., a sum of money lent at interest <Hull applied for a car loan>.
accommodation loan.A loan for which the lender receives no consideration in return. See ACCOMMODATION.
add-on loan.A loan in which the interest is calculated at the stated rate for the loan agreement’s full term for the full principal amount, and then the interest is added to the principal before installment payments are calculated, resulting in an interest amount higher than if it were calculated on the monthly unpaid balance. • Consumer loans are typically add-on loans. — Also termed contract loan. See add-on interest under INTEREST(3).
amortized loan.A loan calling for periodic payments that are applied first to interest and then to principal, as provided by the terms of the note. See AMORTIZATION(1).
back-to-back loan.A loan arrangement by which two firms lend each other funds denominated in different currencies for a specified period.
below-market loan.See interest-free loan.
bridge loan.A short-term loan that is used to cover costs until more permanent financing is arranged. — Also termed swing loan.
broker call loan.See call loan.
building loan.A type of bridge loan used primarily for erecting a building. • The loan is typically advanced in parts as work progresses and is used to pay the contractor, subcontractors, and material suppliers. See interim financing under FINANCING.
call loan.A loan for which the lender can demand payment at any time, usu. with 24 hours’ notice, because there is no fixed maturity date. — Also termed broker call loan; demand loan. Cf. term loan. [Cases: Bills and Notes 129(3). C.J.S. Bills and Notes; Letters of Credit§ 90.]
character loan.A loan made in reliance on the borrower’s character and stable earnings. • Character loans are usu. secured by a mortgage or by other property, but sometimes they are unsecured.
clearing loan.A loan made to a bond dealer pending the sale of a bond issue. collateral loan.See secured loan.
commercial loan.A loan that a financial institution gives to a business, generally for 30 to 90 days.
commodity loan.A loan secured by a commodity (such as cotton or wool) in the form of a warehouse receipt or other negotiable instrument.
consolidation loan.A loan whose proceeds are used to pay off other individual loans, thereby creating a more manageable debt.
consumer loan.A loan that is given to an individual for family, household, personal, or agricultural purposes and that is generally governed by truth-in-lending statutes and regulations. [Cases: Consumer Credit 1. C.J.S. Interest and Usury; Consumer Credit § 274.] contract loan.See add-on loan.
Crown loan.Tax. An interest-free demand loan, usu. from parent to child, in which the borrowed funds are invested and the income from the investment is taxed at the child’s rate. • This type of loan is named for one Harry Crown of Chicago, reputedly one of the first persons to use it.
See kiddie tax under TAX. day loan.A short-term loan to a broker to finance daily transactions. demand loan.See call loan.
discount loan.A loan in which interest is deducted in advance, at the time the loan is made.
doorstep loan.A loan offered by a door-to-door solicitor, usu. for home repairs at a high interest rate and under misleading or fraudulent terms. • The term is used primarily in the United Kingdom.
home-equity loan.A line of bank credit given to a homeowner, using as collateral the homeowner’s equity in the home. — Often shortened to equity loan. — Also termed home-equity line of credit. See EQUITY(7).
installment loan.A loan that is to be repaid in usu. equal portions over a specified period.
interest-free loan.Money loaned to a borrower at no charge or, under the Internal Revenue Code, with a charge that is lower than the market rate. IRC (26 USCA) § 7872. — Also termed (in the IRC) below-market loan.
maritime loan.A loan providing that a lender will not be repaid if the cargo is damaged or lost because of a navigational peril, but that the lender will be repaid plus interest if the cargo arrives safely or is damaged because of the carrier’s negligence. — Also termed marine loan.
mortgage loan.A loan secured by a mortgage or deed of trust on real property. [Cases: Mortgages 14. C.J.S. Mortgages §§ 143–150.] nonperforming loan.An outstanding loan that is not being repaid.
nonrecourse loan.A secured loan that allows the lender to attach only the collateral, not the borrower’s personal assets, if the loan is not repaid. [Cases: Bills and Notes 44; Secured Transactions 227, 240. C.J.S. Bills and Notes; Letters of Credit § 11; Secured Transactions §§ 152, 164–166, 168–169, 172, 174–175, 180–183.]
participation loan.A loan issued by two or more lenders. See LOAN PARTICIPATION. [Cases: Contracts 194.]
policy loan.An insurer’s loan to an insured, secured by the policy’s cash reserve. [Cases: Insurance 1868. C.J.S. Insurance §§ 352–356.]
precarious loan. 1. A loan that may be recalled at any time. 2. A loan in danger of not being repaid.
premium loan.A loan made to an insured by the insurer to enable the insured to pay further premiums. • The reserve value of the policy serves as collateral. [Cases: Insurance 1868, 2037. C.J.S. Insurance §§ 352–356, 518–519, 742–745, 749–754.]
recourse loan.A loan that allows the lender, if the borrower defaults, not only to attach the collateral but also to seek judgment against the borrower’s (or guarantor’s) personal assets. [Cases: Secured Transactions 227, 240. C.J.S. Secured Transactions §§ 152, 164–166, 168–169, 172, 174–175, 180–183.]
revolver loan.A single loan that a debtor takes out in lieu of several lines of credit or other loans from various creditors, and that is subject to review and approval at certain intervals. • A revolver loan is usu. taken out in an attempt to resolve problems with creditors. Cf. revolving credit under CREDIT (4).
revolving loan.A loan that is renewed at maturity.
secured loan.A loan that is secured by property or securities. — Also termed collateral loan. short-term loan.A loan with a due date of less than one year, usu. evidenced by a note.
signature loan.An unsecured loan based solely on the borrower’s promise or signature. • To obtain such a loan, the borrower must usu. be highly creditworthy.
swing loan.See bridge loan.
term loan.A loan with a specified due date, usu. of more than one year. • Such a loan typically cannot be repaid before maturity without incurring a penalty. — Also termed time loan. Cf. call loan. [Cases: Bills and Notes 129(1). C.J.S. Bills and Notes; Letters of Credit §§ 86–89, 91.] loan,vb. To lend, esp. money.
[Blacks Law 8th]