Borrower

economic-dictionary

The borrower is the economic agent, individual or company, who receives the loan for a certain amount of money. The latter undertakes to return the same plus interest together with an additional part for interest on a fixed due date.

Usually the borrower agrees with an individual or lender to receive financing through a loan or credit, under the condition of committing to its repayment some time later, taking into account a series of initially agreed clauses.

In this sense, the borrower could also be understood as the debtor agent of a sum of money received through a financial product and aimed at the purchase or financing of an asset.

As a complementary figure to that of the borrower, we find that of the lender, who lends his money assuming a level of risk to obtain a greater amount in the future and, therefore, obtaining an economic benefit with said credit or loan activity.

The most common example in everyday economic life is that of the mortgage-type borrower, since he commits himself for a large number of years to repay a mortgage loan aimed at financing the purchase of his home.

Requirements demanded of the borrower

There are a series of conditions that a particular entity or individual must meet to become a borrower:

  • You must initially accept a series of conditions established by the individual or lender
  • It is necessary that it be designated as eligible after an assessment of its solvency. In other words, their ability to comply with the agreed agreement must be confirmed.
  • There is extensive regulation in each country that sets limits on the rights and duties of lenders, created especially to guarantee their protection in the financial market.

Other readings of the borrower concept

Often in economic language, borrowers are also defined as those individuals who through a contract in force become long-lasting customers of a certain service.

For example, we become borrowers with respect to the telephone company that provides us with a mobile line or Internet.

Tags:  present biography comparisons 

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