What are the main elements of a loan?

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  • The parties: lender, the financial or banking entity that offers the loan, and the borrower who is the person requesting the loan and who commits to repaying the amount received plus interest.
  • The Amount is the quantity of money requested by the borrower, and the Loan Instalment is the amount of money that they pay periodically to repay the loan.
  • The interest is the cost of being able to use someone else’s money for a period of time.
  • The Commissions are the additional expenses involved in granting and administering a loan.