Borrower

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."

Contents 1 Expanded Definition 2 Related Fool Articles 3 Related Terms 4 Recent Mentions on Fool.com

Expanded Definition

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

• Borrow When You Don't Need To
• Borrow Like the Rich

Related Terms

• Borrow
• Loan
• Debt
• Debtor
• Creditor
• Interest
• APR
• Leverage

Recent Mentions on Fool.com

• Prudence Just Ain't FHA's Thing (FNM, FRE)
• Mortgage Lending: Partying Like It's 2005
• Fool.com: Macro Economics [Post of the Day] October 12, 2009
• Lehman Brothers and the Age of Stupidity
• 3 Reasons Mortgage Modifications Are Failing
• Could This Prevent Another Housing Blowup?

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