We may not always have the funds necessary to accomplish some tasks or purchase certain items. Individuals and businesses/firms/institutions resort to borrowing money from lenders in these scenarios.
When a lender lends money to an individual or corporation with the assurance of faith that the recipient would repay the borrowed funds with certain added benefits, such as an interest rate, the process is referred to as lending or borrowing.
A loan is composed of three components: the principal, or the amount borrowed, the rate of interest, and the tenure, or the period of the loan.
The majority of us prefer to borrow money from a bank or a reputable non-bank financing business. These institutions are bound by government laws and are regarded as trustworthy. Lending is a critical component of any bank's or NBFC's (Non-Bank Financial Company's) financial product offering.