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A loan commitment is a promise made by a lender to lend a borrower a certain amount of money under specific conditions. When a borrower applies for a loan, the lender may issue a loan commitment which outlines the amount of money the borrower can receive, the interest rate, and the repayment terms.
For example, imagine you want to buy a house and you apply for a mortgage loan from a bank. If the bank approves your application, they will issue a loan commitment which outlines the terms of the loan, such as the interest rate, the amount of money they will lend you, and the repayment terms.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
A loan commitment, oh what a thing!
It's a promise from a lender, with terms that they bring.
When you want to buy a house or car,
The lender will pledge money, from near or far.
They'll tell you how much they can lend,
And when it's due, that's the end.
They'll give you an interest rate to pay,
And a deadline to repay on a certain day.
So a loan commitment is quite grand,
It's a pledge to lend money, with terms in hand.