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mid-13c., from Old Norse lan, related to lja "to lend," from Proto-Germanic *laikhwniz (cf. Old Frisian len "thing lent," Middle Dutch lene, Dutch leen "loan, fief," Old High German lehan, German Lehn "fief, feudal tenure"), originally "to let have, to leave (to someone)," from PIE *leikw- "to leave" (see relinquish).
The Norse word also is cognate with Old English læn "gift," which did not survive into Middle English, but its derived verb lænan is the source of lend. As a verb, loan is attested from 1540s, perhaps earlier, and formerly was current, but has now been supplanted in England by lend, though it survives in American English.
Loan word (1874) is a translation of German Lehnwort; loan-translation is attested 1933, from German Lehnübersetzung. Slang loan shark first attested 1900.
The Mosaic law required that when an Israelite needed to borrow, what he asked was to be freely lent to him, and no interest was to be charged, although interest might be taken of a foreigner (Ex. 22:25; Deut. 23:19, 20; Lev. 25:35-38). At the end of seven years all debts were remitted. Of a foreigner the loan might, however, be exacted. At a later period of the Hebrew commonwealth, when commerce increased, the practice of exacting usury or interest on loans, and of suretiship in the commercial sense, grew up. Yet the exaction of it from a Hebrew was regarded as discreditable (Ps. 15:5; Prov. 6:1, 4; 11:15; 17:18; 20:16; 27:13; Jer. 15:10). Limitations are prescribed by the law to the taking of a pledge from the borrower. The outer garment in which a man slept at night, if taken in pledge, was to be returned before sunset (Ex. 22:26, 27; Deut. 24:12, 13). A widow's garment (Deut. 24:17) and a millstone (6) could not be taken. A creditor could not enter the house to reclaim a pledge, but must remain outside till the borrower brought it (10, 11). The Hebrew debtor could not be retained in bondage longer than the seventh year, or at farthest the year of jubilee (Ex. 21:2; Lev. 25:39, 42), but foreign sojourners were to be "bondmen for ever" (Lev. 25:44-54).