4. A legally binding agreement between a borrower and lender is called a: A) Contract B) Collateral C) Credit report D) Finance charge

When you think of borrowing money, imagine a handshake that turns into a formal text: that’s your loan contract! It outlines the dos and don'ts, protecting both the borrower and the lender, and ensuring everyone knows what’s expected. Now, let’s talk about what makes these contracts legal! They must include essential elements, like mutual consent and an exchange of value. Forgetting these can make agreements as shaky as a house of cards. Always read the fine print—and maybe even have a lawyer take a look!