A lender is a person or organization that gives money to someone else with the expectation that it will be paid back, usually with extra money called interest. When you borrow five dollars from a friend to buy lunch, promising to pay them back tomorrow, your friend becomes a lender. When a family borrows money from a bank to buy a house, the bank is the lender.

Banks are the most common lenders. They lend money for cars, homes, and businesses, making their profit from the interest borrowers pay over time. If you borrow $100 and agree to pay back $110, that extra $10 is the interest, the cost of borrowing.

A library lends books. A lender lends money. The key difference is that when you borrow money, you don't return the exact same bills and coins. You return the same amount of money, plus interest.

Being a responsible borrower matters to lenders. They want to know you'll keep your promise to pay them back. That's why lenders check credit histories and ask questions before approving loans. Someone who regularly pays back what they borrow builds a reputation for trustworthiness, making lenders more willing to help them in the future.