BorrowerFinancial Dictionary -> General Finance -> Borrower
Entering into a loan agreement as a borrower makes you legally responsible to pay back the
lender, or else they can take you to court. If you legitimately don't have the money to payback what you have borrowed it is common to seek credit counseling and utilize debt consolidation services in order to get repayments in order.
As a borrower you are given certain pre-agreed terms in relation to the loan. These include the amount you borrowed, the total amount due back, the interest rates, length between each installment (for example once a month) and the length of the loan agreement. For example Tom is a borrower and may take out a $50,000 loan over a seven year period, with a 7% interest rate and is expected to pay it back in monthly installments.
A borrower may see getting a loan as a way of getting out of financial trouble, but in the long run it can get the person into even more debt, resulting in a chain of loans and serious legal problems. It is important for a borrower to have some kind of plan and financial analysis to work out if they can realistically borrow a certain amount of money and pay it back. A business will become a borrower when they need initial cash to invest, when they are sure the investment will result in profits and the ability to pay the loan back.
Many financial institutions will lend borrower money, although the most common institution is simply the bank. Occasionally a desperate person, or somebody involved in illegal activities will use an illegal loan shark, who may use physical force to get their money and will usually charge extortionate interest rates.
Borrowing money is a perfectly acceptable thing to do, although you should always be sure you can pay back the loan.