- Definition
A loan is when you borrow money from someone, and you promise to pay it back, usually with a little extra money called interest.
If you take out a $500 loan for a new computer, you will need to pay back the $500 plus an extra amount called interest.
How to teach this in 30 seconds
Try this analogy: A loan is like borrowing money from the bank to buy something big, like a bike, and then paying it back a little at a time, plus a bit extra for their help.
Ask your child: Why might someone need to get a loan to buy a house or a car?
Common mix-up: Kids might think a loan is just borrowing money you pay back later. A loan almost always includes interest, meaning you pay back more than you originally borrowed.
Examples
- A family gets a mortgage, which is a large loan from a bank to buy a house.
- A student takes out a loan to help pay for college tuition.
- Someone starting a new bakery might get a business loan to buy ovens and supplies.
loan is a term used in Ontario’s Kindergarten to Grade 8 curriculum.
Where this shows up
The descriptions on this page are SmartStudy’s own original, plain-language writing — not the Ministry’s wording. They are aligned to the Ontario Curriculum, © King’s Printer for Ontario. For the Ministry’s official wording, see the source link below. SmartStudy is an independent service and is not affiliated with, endorsed by, or sponsored by the Government of Ontario or the Ministry of Education. Ontario Curriculum and Resources ↗
