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Definition of 'Lender'

A lender is a person or institution that provides money or credit to another person or institution. The lender typically charges interest on the loan, which is the cost of borrowing money. The interest rate is expressed as a percentage of the principal amount of the loan. The lender may also require the borrower to provide collateral, which is an asset that the borrower pledges to the lender in the event that the borrower defaults on the loan.

There are many different types of lenders, including banks, credit unions, and online lenders. Banks are the most common type of lender, and they offer a wide variety of loan products, including personal loans, auto loans, and mortgages. Credit unions are nonprofit financial institutions that are owned by their members. They typically offer lower interest rates than banks, but they may have fewer loan products available. Online lenders are relatively new to the lending market, but they are quickly gaining popularity due to their convenience and ease of use.

When choosing a lender, it is important to compare interest rates, fees, and terms from multiple lenders. It is also important to consider the lender's reputation and customer service record.

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