A borrower is an entity that takes a loan, a certain amount of money that must be paid back, almost always with interest. Borrowed money is called "debt," and a borrower may also be called a "debtor."
A borrower often hopes to use the loan to make a profit exceeding the amount of interest he owes. For example, if someone can use $200 to make a profit of $40 in one year, but he has only $100, he might borrow the other $100 at 10% APR, make his $40, and repay the $110 he owes. In this way, he has made a profit of $30 (the $240 minus the $110 he repaid, minus the $100 he already had). Debt used in this way is called "leverage."
Related Fool Articles
Recent Mentions on Fool.com
- As Oil Prices Tumble, This Texas Bank Is A Great Contrarian Buy
- 2 Super Safe Oil Stock Dividends, and 1 That?s Not
- Market's Manic Monday; Or, How I Learned to Stop Worrying and Love Long-Term Investing
- After Several Missteps, LINN Energy LLC Announces a New CFO
- 3 Ways the Internet of Things Will Change Bank of America and Citigroup
- 3 Reasons First Republic Bank Is a Buy
Note: you need to delete the line break between the two lines of the "Recent Mentions" (your search