Repayment of a debt or loan is obligatory for the debtor in all cases. In the case of a loan, the consequences of non-repayment to the bank can sometimes be catastrophic. The bank may place a lien on the debtor's mortgaged property, which serves as collateral for the loan. Consequently, the debtor risks losing his assets. A loan is defined as any financial transaction between two parties, where the first party (the debtor) receives money from the other party (the creditor), known as a 'debt'. However, if one of the parties to the transaction is a bank, the term commonly used is 'loan'. A loan is a debt from a bank, which is most often repaid based on an interest rate agreed upon by both parties.
