From Open Risk Manual
(Redirected from Loan Or Credit)


A Loan (or more generally a Credit) is a basic type of Financial Product which entails the lending (loaning) of an amount of money (or other asset) under agreed terms and charges. A loan is essentially making available money to another party in exchange for future repayment of the principal amount plus interest or other finance charges.

A loan may be for a specific, one-time amount or can be available as a variable credit line or overdraft up to a specified ceiling amount.It is also possible to make loans of actual real and financial assets. A loan involves minimally two parties:

  • the lender (also creditor), who provides the use of an asset (when cash, denotes as principal). Banks and other financial institutions are the primary lenders
  • the borrower (also obligor, debtor) who acquires the use of the cash or property. Individuals, firms small and large, public entities and governments are the typical borrowers

The borrower typically promises, via a legal binding and enforceable contract, to return the principal after a specified period along with payment for its use, called interest. Failure to perform (fulfil) this contract is termed Credit Risk

In terms of the [1] it is a subclass of the Financial Product category.


  • Loan Term: The duration (or tenor) of the loan or credit agreement.
  • Loan Type: The type of a loan or credit.
  • Amount: The amount of money.
  • Grace Period: The period of time after any due date that the borrower has to fulfil its obligations before a default (failure to pay) is deemed to have occurred.
  • Currency: The currency in which the monetary amount is expressed (in 3-letter ISO 4217 format).
  • Loan Repayment Form: A form of paying back money previously borrowed from a lender. Repayment usually takes the form of periodic payments that normally include part principal plus interest in each payment. More details in the Contractual Cash Flows entry
  • Recourse Loan: The only way you get the money back in the event of default is the security (or collateral). Recourse is where you still have the opportunity to go back to the borrower for the rest of the money.
  • Prepayable Loan: Whether the loan (or a subset of amounts) can be repaid earlier than stipulated in the contract and under what conditions and/or penalty
  • Renegotiable Loan: Whether the terms for payment of interest can be renegotiated during the life of the loan.
  • Required Collateral: Assets required to secure loan or credit repayments. It may take form of third party pledge, goods, financial instruments (cash, securities, etc.)
  • Annual Percentage Rate
  • Interest Rate
  • Fees And Commissions Specification

Service Domain

Handles the fulfillment of a general loan product (initial set-up and completion of processing tasks).

See Also


  1. Financial Industry Business Ontology project