What is a Creditor?

Creditor is a person or an institution which loans money to another person or company. There are two types of creditors personal and real. Person creditors usually loan money to friends and close relatives and the real ones are banks and finance institutions with whom the borrower signs a contract stating the loan duration and the interest rate what he’s going to pay when he the contract reaches maturity date. Real creditors may ask for collateral to be put to secure the credit and when if the borrower default on his payments then the creditor can take the collateral which is usually real estate or a car and sell it to cover his loss.