A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount.

The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Types of loans[link]

Secured[link]

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

Unsecured[link]

Unsecured loans are monetary loans that are not secured against the borrower's assets. These may be available from financial institutions under many different guises or marketing packages:

• credit card debt
• personal loans
• bank overdrafts
• credit facilities or lines of credit
• corporate bonds (may be secured or unsecured)

The interest rates applicable to these different forms may vary depending on the lender and the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Interest rates on unsecured loans are nearly always higher than for secured loans, because an unsecured lender's options for recourse against the borrower in the event of default are severely limited. An unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrower's unencumbered assets (that is, the ones not already pledged to secured lenders). In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrower's assets. Thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible.

Demand[link]

Demand loans are short term loans ^[1] that are atypical in that they do not have fixed dates for repayment and carry a floating interest rate which varies according to the prime rate. They can be "called" for repayment by the lending institution at any time. Demand loans may be unsecured or secured.

[edit] Subsidized

A subsidized loan is a loan on which the interest is reduced by an explicit or hidden subsidy. In the context of college loans in the United States, it refers to a loan on which no interest is accrued while a student remains enrolled in education.^[2] Otherwise, it may refer to a loan on which an artificially low rate of interest (or none at all) is charged to the borrower.

An unsubsidized loan is a loan that gains interest at a market rate from the date of disbursement.

Target markets[link]

Personal or commercial[link]

Loans can also be subcategorized according to whether the debtor is an individual person (consumer) or a business. Common personal loans include mortgage loans, car loans, home equity lines of credit, credit cards, installment loans and payday loans. The credit score of the borrower is a major component in and underwriting and interest rates (APR) of these loans. The monthly payments of personal loans can be decreased by selecting longer payment terms, but overall interest paid increases as well. For car loans in the U.S., the average term was about 60 months in 2009.^[3]

Loans to businesses are similar to the above, but also include commercial mortgages and corporate bonds. Underwriting is not based upon credit score but rather credit rating.

Loan payment[link]

The most typical loan payment type is the fully amortizing payment in which each monthly rate has the same value over time.^[4]

The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is: ^[5]

Failed to parse (Missing texvc executable; please see math/README to configure.): P = L \cdot \frac{c\,(1 + c)^n}{(1 + c)^n - 1}

Abuses in lending[link]

Predatory lending is one form of abuse in the granting of loans. It usually involves granting a loan in order to put the borrower in a position that one can gain advantage over him or her. Where the moneylender is not authorized, they could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited interest rates. Credit card companies in some countries have been accused by consumer organisations of lending at usurious interest rates and making money out of frivolous "extra charges".^[6]

Abuses can also take place in the form of the customer abusing the lender by not repaying the loan or with an intent to defraud the lender.

United States taxes[link]

This section needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (February 2012)

Most of the basic rules governing how loans are handled for tax purposes in the United States are codified by both Congress (the Internal Revenue Code) and the Treasury Department (Treasury Regulations — another set of rules that interpret the Internal Revenue Code).^[7] Yet such rules are universally accepted.^[8]

1. A loan is not gross income to the borrower.^[9] Since the borrower has the obligation to repay the loan, the borrower has no accession to wealth.^[10]

2. The lender may not deduct (from own gross income) the amount of the loan.^[11] The rationale here is that one asset (the cash) has been converted into a different asset (a promise of repayment).^[12] Deductions are not typically available when an outlay serves to create a new or different asset.^[13]

3. The amount paid to satisfy the loan obligation is not deductible (from own gross income) by the borrower.^[14]

4. Repayment of the loan is not gross income to the lender.^[15] In effect, the promise of repayment is converted back to cash, with no accession to wealth by the lender.^[16]

5. Interest paid to the lender is included in the lender’s gross income.^[17] Interest paid represents compensation for the use of the lender’s money or property and thus represents profit or an accession to wealth to the lender.^[18] Interest income can be attributed to lenders even if the lender doesn’t charge a minimum amount of interest.^[19]

6. Interest paid to the lender may be deductible by the borrower.^[20] In general, interest paid in connection with the borrower’s business activity is deductible, while interest paid on personal loans are not deductible.^[21] The major exception here is interest paid on a home mortgage.^[22]

Income from discharge of indebtedness[link]

Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness. ^[23] Thus, if a debt is discharged, then the borrower essentially has received income equal to the amount of the indebtedness. The Internal Revenue Code lists “Income from Discharge of Indebtedness” in Section 61(a)(12) as a source of gross income.

Example: X owes Y $50,000. If Y discharges the indebtedness, then X no longer owes Y $50,000. For purposes of calculating income, this should be treated the same way as if Y gave X $50,000.

For a more detailed description of the “discharge of indebtedness”, look at Section 108 (Cancellation of Debt (COD) Income) of the Internal Revenue Code.^[24]

See also[link]

• Finance, Personal finance, Settlement (finance)
• Debt, Consumer debt, Debt consolidation, Government debt
• Bank, Fractional-reserve banking, Building society
• Annual percentage rate (a.k.a. Effective annual rate)
• Default (finance)
• Interest-only loan, Negative amortization, PIK loan
• Leveraged loan
• Loan guarantee
• Loan sale
• Payday loan
• Refund Anticipation Loan
• Student loan
• Syndicated loan
• Title loan
• Legal financing

US specific:

• FAFSA
• Federal student loan consolidation
• Federal Perkins Loan
• George D. Sax and the Exchange National Bank of Chicago - Innovation of instant loans
• Stafford loan
• Student loan default

References[link]

Duane Allman
At Fillmore East, 1971
Background information
Birth name	Howard Duane Allman
Also known as	Skydog
Born	(1946-11-20)November 20, 1946 Nashville, Tennessee
Died	October 29, 1971(1971-10-29) (aged 24) Macon, Georgia
Genres	Southern rock, blues, blues-rock, soul, rock, jazz
Occupations	Musician, songwriter
Instruments	Guitar, vocals
Years active	1961–1971
Labels	Mercury, Capricorn
Associated acts	The Hour Glass, Wilson Pickett, The Allman Brothers Band, Derek and the Dominos, Aretha Franklin, Herbie Mann, Gregg Allman, The Allman Joys
Website	AllmanBrothersBand.com
Notable instruments
Gibson Les Paul Gibson SG Fender Stratocaster Gibson ES-345

Duane Allman (born Howard Duane Allman; November 20, 1946 – October 29, 1971) was an American guitarist, session musician and the primary co-founder and leader of the The Allman Brothers Band, until his early death in a motorcycle accident in 1971 at the age of 24.

ABB was formed in 1969 and, unusually for the time, based in the Southeastern United States. In the early 1970s the band was hugely successful. Duane is best remembered for his brief but influential tenure in that band and in particular for his expressive slide guitar playing and inventive improvisational skills.^[1] In 2003, Rolling Stone magazine ranked Allman at #2 in their list of the 100 greatest guitarists of all time, second only to Jimi Hendrix and in 2011 he was ranked #9.^[2] His tone (achieved with a Gibson Les Paul and two 50-watt bass Marshall amplifiers) was named one of the greatest guitar tones of all time by Guitar Player.^[3]

A sought-after session musician both before and during his tenure with the band, Duane Allman performed with such established stars as King Curtis, Aretha Franklin, Wilson Pickett, and Herbie Mann. He also contributed heavily to the 1970 album Layla and Other Assorted Love Songs by Derek and the Dominos.

Duane Allman’s skills as a guitarist were complemented by personal qualities such as his intensity, drive and ability to draw the best out of others in making music.^[4] He is still referred to by his nickname "Skydog".^[5]

Early years[link]

Duane Allman was born November 20, 1946 in Nashville, Tennessee. He was the eldest son of Willis Allman, a career United States Army sergeant, and Geraldine (née Robbins). His younger brother Gregg Allman was born in late 1947.

While the family were living near Norfolk, Virginia, his father was murdered by a fellow veteran hitchhiker.^[6] In order to retrain as an accountant, Geraldine "Mama A" Allman sent Duane and Gregg to Castle Heights Military Academy in Lebanon, Tennessee, which they both disliked intensely.^[7] In 1957, the family moved to Daytona Beach, Florida where the boys attended Seabreeze High School.

The boys returned to Nashville to spend summers with their grandmother where Gregg learned guitar basics from a neighbour. In 1960, Gregg had saved enough money to buy his first guitar, a Japanese-made Teisco Silvertone while Duane acquired a Harley 165 motorbike which he soon wrote off. So Duane began to take an interest in the guitar leading to fights over it and eventually their mother bought Duane a Gibson Les Paul Junior.^[8]

It was also in Nashville that the boys became musically inspired by a rhythm and blues concert they attended, at which blues guitar legend B. B. King performed. Apparently, Duane turned to Gregg and said, "We got to get into this." ^[8]

Duane learned to play very quickly and soon became the better guitarist of the two, dropping out of high school to stay home during the day and focus on developing his guitar skills.

Allman Joys and Hour Glass[link]

The two Allman brothers started playing publicly in 1961, joining or forming a number of small, local groups. Shortly thereafter, Duane quit high school to stay home during the day and focus on his guitar playing. Their band the Escorts opened for The Beach Boys in 1965 but disbanded and eventually became the Allman Joys. After Gregg graduated from Seabreeze High School in 1965, the Allman Joys went on the road, performing throughout the Southeast and eventually being based in Nashville and St. Louis, Missouri.

The Allman Joys morphed into another not-completely-successful band, The Hour Glass, which moved to Los Angeles in early 1967. There the Hour Glass produced two albums that left the band unsatisfied. Liberty, their record company, tried to market them as a pop band, completely ignoring the band's desire to play more blues-oriented material.

In 1968, Gregg Allman went to visit Duane on his 22nd birthday. Duane was sick in bed. Gregg brought along a bottle of Coricidin pills for his fever and the debut album by guitarist Taj Mahal as a gift. "About two hours after I left, my phone rang," Gregg states. "Baby brother, baby brother, get over here now!" When Gregg got there, he found that Duane had poured the pills out of the bottle, washed off the label and was using it as a slide to play "Statesboro Blues", an old Blind Willie McTell song that Taj Mahal covered. "Duane had never played slide before," says Gregg, "he just picked it up and started burnin'. He was a natural."^{[citation needed]} The song would go on to become a part of the Allman Brothers Band's repertoire, and Duane's slide guitar became crucial to their sound.

The Hour Glass broke up in early 1968, and Duane and Gregg Allman went back to Florida, where they played on demo sessions with the 31st of February, a folk rock outfit whose drummer was Butch Trucks. Gregg returned to California to fulfill Hour Glass obligations, while Duane jammed around Florida for months but didn't get another band going.

Session musician[link]

Allman's playing on the two Hour Glass albums and an Hour Glass session in early 1968 at FAME Studios in Muscle Shoals, Alabama, had caught the ear of Rick Hall, owner of FAME. In November 1968 Hall hired Allman to play on an album with Wilson Pickett. Allman's work on that album, Hey Jude (1968), got him hired as a full-time session musician at Muscle Shoals and brought him to the attention of a number of other musicians, such as Eric Clapton, who later said, "I remember hearing Wilson Pickett's 'Hey Jude' and just being astounded by the lead break at the end. I had to know who that was immediately—right now."

Allman's performance on "Hey Jude" blew away Atlantic Records producer and executive Jerry Wexler when Hall played it over the phone for him. Wexler immediately bought Allman's recording contract from Hall and wanted to use him on sessions with all sorts of Atlantic R&B artists. While at Muscle Shoals, Allman was featured on releases by a number of artists, including Clarence Carter, King Curtis, Aretha Franklin, Laura Nyro, Wilson Pickett, Otis Rush, Percy Sledge, Johnny Jenkins, Boz Scaggs, Delaney & Bonnie and jazz flautist Herbie Mann. Shortly after he recorded the lead break in "Hey Jude", he recorded all of the lead guitar in Boz Scaggs' "Loan Me a Dime". For his first sessions with Aretha, Allman traveled to New York, where in January 1969 he went as an audience member to the Fillmore East to see Johnny Winter and told fellow Shoals guitarist Jimmy Johnson that in a year he'd be on that stage. That December, the Allman Brothers Band indeed played the Fillmore.

Formation of The Allman Brothers Band[link]

The limits of full-time session playing frustrated Allman. The few months in Muscle Shoals were by no means a waste, however; besides meeting the great artists and other industry professionals he was working with, Allman had rented a small, secluded cabin on a lake and spent many solitary hours there refining his playing. Perhaps most significantly, Allman got together with R&B and jazz drummer Jaimoe Johanson, who came to meet Allman at the urging of Otis Redding's manager, Phil Walden, who by now was managing Allman and wanted to build a three-piece band around him. Allman and Jaimoe got Chicago-born bassist Berry Oakley to come up from Florida and jam as a trio, but Berry was committed to his rock band with guitarist Dickey Betts, the Second Coming, and returned south.

Getting fed up with Muscle Shoals, in March Allman took Jaimoe with him back to Jacksonville, Florida, where they moved in with Butch Trucks. Soon a jam session of these three plus Betts, Oakley, and Reese Wynans took place and forged what all present recognized as a natural, or even magical, bond. With the addition of brother Gregg, called back from Los Angeles to sing and replace Wynans on keyboards, at the end of March 1969, the Allman Brothers Band was formed. (Wynans became well known over a decade later as organist with Stevie Ray Vaughan & Double Trouble.) After a bit of rehearsing and gigging, the sextet moved to Macon, Georgia, in April to be near Walden and his Capricorn Sound Studios. While living in Macon, Allman met Donna Roosman, who bore his only child, Galadrielle. Despite their child, the relationship quickly ended.

[edit] Success: Layla, At Fillmore East

The Allman Brothers Band went on to become one of the most influential rock groups of the 1970s, described by Rolling Stone's George Kimball in 1971 as "the best damn rock and roll band this country has produced in the past five years."^[9] After months of nonstop rehearsing and gigging, including free shows in Macon's Central City Park and Atlanta's Piedmont Park, the group was ready to settle on the Allman Brothers Band name, and to record. Their debut album, The Allman Brothers Band, was recorded in New York in September 1969 and released a few months later. In the midst of intense touring, work began in Macon and Miami (Atlantic South - Criteria Studios), and a little bit in New York, on the band's second album, Idlewild South. Produced mostly by Tom Dowd, Idlewild South was released in August 1970 and broke new ground for them by quickly hitting the Billboard charts.

A group date in Miami, also that August, gave Allman the chance to participate in Eric Clapton's Layla and Other Assorted Love Songs. Clapton had long wanted to meet Allman; when he heard that the Allman Brothers were due to play in Miami, where he had just started work on Layla with producer Tom Dowd, he insisted on going to see their concert, where he met Allman. At one point, Allman approached Clapton, fully admiring his ability to play guitar as much as Clapton admired his, and cautiously asked Clapton if he could come by the studio to watch. Clapton was in no way reluctant to say yes, as he knew that his masterful playing combined with Allman's would be greater than the sum of its parts. After the show the two bands—the Allman Brothers Band and Derek and the Dominos—returned to Criteria, where Allman and Clapton quickly formed a deep rapport during an all-night jam session.^[10] Allman wound up participating on most of the album's tracks, contributing some of his best-known work. Allman never left the Allman Brothers Band, though, despite being offered a permanent position with Clapton. Allman never toured with Derek and the Dominos, but he did make three appearances with them on December 1, 1970 at the Curtis Hixon Hall in Tampa (Soulmates LP) and the following day at Onondaga County War Memorial, and one appearance (or possibly just Delaney Bramlett or both Duane and Delaney) November 20, 1970^[11] at the Santa Monica Civic Auditorium, California.

In an interview, Duane told listeners how to tell who played what: Eric played the Fender parts and Duane played the Gibson parts. He continued by nonchalantly noting that the Fender had a sparklier sound, while the Gibson produced more of a "full-tilt screech".^[12]

The Allman Brothers went on to record At Fillmore East in March 1971. Meanwhile, Allman continued contributing session work to other artists' albums whenever he could. According to Skydog: the Duane Allman Story, Allman was in the habit of spontaneously dropping in at recording sessions and contributing to whatever was being taped that day. He received cash payments but no recording credits, making it virtually impossible to compile a complete discography of his works.

Allman was well known for his melodic, extended and attention-holding guitar solos. During this period two of his stated influences were Miles Davis and John Coltrane, having listened extensively to Kind of Blue for two years.^[12][13]

As Allman's distinctive electric bottleneck steel sound began to mature it evolved in time into the musical voice of what would come to be known as Southern Rock, being picked up and redefined in their own styles by slide guitarists that included bandmate Dickey Betts (after Duane's passing), Rory Gallagher, Derek Trucks and Gary Rossington of Lynyrd Skynyrd.

Death[link]

Duane Allman was killed in a motorcycle accident only months after the release and initial success of At Fillmore East.^[14] While in the western part of Macon on October 29, 1971 during a band break from touring and recording, Allman was riding his motorcycle at high speed toward an intersection as a flatbed truck carrying a lumber crane approached. The flatbed truck stopped suddenly in the intersection, forcing Duane to swerve his Harley Davidson Sportster motorcycle sharply to the left to avoid a collision. As he was doing so, he struck either the back of the truck or the ball on the lumber crane and was immediately thrown from the motorcycle. The motorcycle bounced up in the air and landed on Allman and proceeded to skid another 90 feet with Duane pinned underneath, crushing his internal organs. Though he was still alive when he arrived at the hospital, despite emergency surgery, he died several hours later from massive internal injuries. He was just weeks from his 25th birthday.

Memorial[link]

After Allman's funeral and some weeks of mourning, the five surviving members of the Allman Brothers Band carried on, resuming live performances and finishing the recording work interrupted by Duane's death. They named their next album Eat a Peach for Duane's response to an interviewer's question: "How are you helping the revolution?" Allman replied: "There ain't no revolution, only evolution, but every time I'm in Georgia I 'eat a peach' for peace." Released in February, 1972, this double album contains a side of live and studio tracks with Allman, two sides of "Mountain Jam", recorded with Duane at the same At Fillmore East stand in March, and a side of tracks by the surviving five member band.

Bass guitarist Berry Oakley died less than 13 months later in a similar motorcycle crash with a city bus, three blocks from the site of Duane Allman's fatal accident. Oakley's remains were laid to rest beside Duane Allman's in Macon, Georgia's Rose Hill Cemetery.

The variety of Allman's session work and Allman Brothers Band bandleading can be heard to good effect on two posthumous Capricorn releases, An Anthology (1972) and An Anthology Volume II (1974). There are also several archival releases of live Allman Brothers Band performances from what the band calls "Duane's Era".

Shortly after Duane's death, Ronnie Van Zant of Lynyrd Skynyrd dedicated the song "Free Bird", to the memory of Duane Allman. Van Zant would sometimes allude to this in concert; in the "Free Bird" performance at Skynyrd's famed 1976 appearance at Knebworth, England, Van Zant says to pianist Billy Powell, "Play it for Duane Allman." Many people assume the song was written about Duane. However, it had actually been written well before Duane died. (Allen Collins wrote the song after his then girlfriend asked him the question "if I leave here tomorrow, would you still remember me?")

In 1973, fans carved the very large letters "REMEMBER DUANE ALLMAN" in a dirt embankment along Interstate Highway 20 near Vicksburg, Mississippi.^[15][16] A photograph was published in Rolling Stone magazine and in the Rolling Stone Illustrated History of Rock & Roll; the carving itself lasted for over ten years.^[17]

In 1998 the Georgia State Legislature passed a resolution designating a stretch of State Highway 19, US 41, within Macon as the "Duane Allman Boulevard" in his honor.^[18]

Country singer Travis Tritt, in the song "Put Some Drive In Your Country" on his debut album, sings "Now I still love old country/I ain't tryin' to put it down/But damn I miss Duane Allman/I wish he was still around."

Equipment[link]

Allman Joys, Hour Glass[link]

• Fender Telecaster, modified with a Stratocaster neck.^[19]
• Marshall amplifier, with six 10-inch speakers and two horns.^[19]

Early session work[link]

• 1954 Fender Stratocaster, used on the Muscle Shoals Sound Studio studio sessions, now at the Hard Rock Cafe in London at the Vault.^[20]
• Dallas Arbiter Fuzz Face, which used old 9V batteries because "they make a special sound."
• Fender Twin Reverb with JBL speakers.^[19]
• Maestro Echoplex.^[19]
• 1959 Fender Bassman.^[19]

Allman Brothers Band, "Layla", later session work[link]

• 1961 Fender Stratocaster (for early session work overlapping with formation of the Band).^[19]
• 1958-1962 Gibson ES-345 Semi-hollow body (first album)^[20]
• 1957 Gibson Les Paul Standard goldtop, serial no. 7 3312. Traded on September 16, 1970 for a 1959 Gibson Les Paul Standard cherry sunburst, except for the pickups.
• 1959 Gibson Les Paul Standard cherry sunburst, acquired on September 16, 1970, except for the pickups.
• 1958 Gibson Les Paul Standard tobacco sunburst,^[20] acquired in June 1971.
• 1961 Gibson SG,^[20] used for slide,^[19] given by Dickey Betts.
• Marshall 50-watt^[3] head, two Marshall 4x12 cabinets with JBL speakers.^[19]
• Fender Champ combo amplifier ("Layla")

Other[link]

• Gibson L-00 acoustic guitar^[19]
• Fender Rock N' Roll 150 strings (Hour Glass)
• Coricidin medicine bottle (slide)

Discography[link]

Biography portal

References[link]

Further reading[link]

External links[link]

• Duane Allman.com
• Duane Allman on allmanbrothersband.com
• Duane Allman.info
• In memory of Duane Allman: 35 years after his death, Skydog still among rock's very best guitarists, on MSNBC
• The 100 Greatest Guitarists of All Time
• Georgia House of Representatives SR653, designating Duane Allman Boulevard and Raymond Berry Oakley Bridge
• "Duane Allman". Find a Grave. http://www.findagrave.com/cgi-bin/fg.cgi?page=gr&GRid=1189. Retrieved September 2, 2010. 
• Inducted into the Rock & Roll Hall of Fame 1995