The world of football is different to most other sports in many capacities, not least in the ways transfers work.
Few other sports boast a similar system as the main method of player acquisition, whereby teams are allowed to purchase athletes from other clubs. In actuality, that’s not quite the case, as clubs are instead paying large sums of money to buy out the player’s current contract before signing a new one with the same individual. In essence, a transfer fee allows a club exclusive negotiating rights with a player to hash out a brand new contract and thus facilitate a move.
This system also allows for temporary moves known as a loan, which see players move to a club for a fixed period of time, usually to the end of a season and almost never for more than two years.
The Sporting News details how loans work, when they are most often used, and what they mean for the two clubs and player.
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What is a loan in soccer? Explaining the basics
In essence, a loan is exactly what it sounds like.
Soccer clubs can temporarily transfer a player to another club for a contractually stipulated length of time, usually from the point of the loan’s confirmation to the end of the season. Once the loan expires, the player will return to the parent club, except in certain circumstances.
Throughout the course of the loan, the player’s contract with their initial club, known traditionally as the “parent club,” remains active, but the new temporary club assumes the registration rights of the player for the agreed-upon time. Essentially, the player moves to play for the new club temporarily, and then returns to their original club after the predetermined time is up.
Depending on the specifics of each individual loan deal, a loaned player may be paid in full by the parent club, in full by the loan club, or see their wages split between the two. Sometimes, if the player is a big enough name, there may be a loan fee that the acquiring club must pay the parent club. This is almost always a far smaller sum of money than a full transfer fee.
Some loans will specify how regularly the player will see the field, while others are less specific in how the loan club will use the individual player. Some also have options or stipulations for what will happen at the end of the loan, which will be explained below.
Most loans are structured to last until the end of the current season and are usually agreed in the preseason transfer window — in which case, the player is loaned out for all of the season to come — or during the mid-season transfer period, which means a player will spend five to six months away from their parent club.
Sometimes, a player might sign a half-season loan in the beginning of the campaign, allowing the two clubs to re-assess the situation midway through the term. On rare occasions, a player can sign a two-year loan, but they are almost never longer than that.
What is the purpose of a loan transfer?
There are a number of reasons why a loan might be a sensible move for an individual player and club(s).
The most common purpose behind a loan move is for a player, usually a younger one with limited experience at the highest level, is at the stage of their development where they need game minutes. While they will likely not factor into the regular starting lineup for their current club right now, the club still wishes to have them on their roster in the longer term and thus wants to see them develop into a viable starter for them in the future.
For example, a big Premier League club like Chelsea may wish to loan a youth player to either a lower-tier Premier League club or a lower-league club where they will get regular starting minutes for the season before returning to Chelsea to continue their career.
This is not the only reason for loaning a player. Another popular instance is when a club is looking to offload an out-of-form or disgruntled player quickly.
Often, loan deals can be hashed out quicker than permanent transfers, at a lesser risk to the loaning club. Thus, the parent club can shed some salary quickly, find a solution for the player, and re-evaluate the situation at the end of the season when permanent transfers can be completed with ease.
Barcelona did this with Philippe Coutinho, for example, as the Brazilian struggled to perform in Spain. He was loaned to both Bayern Munich and Aston Villa for one season each before eventually sealing a permanent transfer to the Premier League club in the summer of 2022.
A third loan scenario often involves the permanent transfer of a young player to a bigger club. The buying club may agree to send the player back to the selling club on loan, allowing them to continue their development in comfortable surroundings before joining their new side at an appropriate time.
For example, Liverpool agreed the signing of Giorgi Mamardashvili but loaned him back to Valencia for the full 2024/25 season. He is due to move to the Premier League side ahead of 2025/26.
Can loaned players play against their parent club?
If a player is loaned to a club in the same country or league as their parent club, there are instances where that player may be faced with the possibility of lining up against their employers.
This is an awkward proposition where a player contracted to a club could negatively alter that club’s season with a strong performance for their loan club.
The rules vary by league when it comes to whether this is allowed to happen. The most notable example is in the Premier League, where loaned players are generally not allowed to play against their parent club. In these situations, the player is ineligible for any match against the club to whom they are contracted. Jadon Sancho, for instance, was not allowed to face Manchester United in 2024/25 while playing on loan at Chelsea.
However, this is not always the case in leagues across the world.
To circumvent this, some loan contracts may take the added step of explicitly stipulating that a player cannot line up against their parent club. This is the case for most Premier League loans: while the league does not mandate that players sit out matches against their parent club, most loans between Premier League clubs include this stipulation.
In some places, however, this can be looked down upon, mocked by its colloquial name of a “fear clause.”
What is an option to buy and does it differ from an obligation to buy?
Sometimes, loans can come with either an option to buy or obligation to buy at the end of the deal.
This indicates that at the expiration of the deal, which almost always occurs at the conclusion of the season, the loan club will have the opportunity to complete a permanent transfer for the player.
The price at which the option or obligation to buy is cemented is set at the signing of the loan deal, representing a fixed price that may or may not be paid at the end of the loan.
An option to buy means that the loan club can choose either to trigger the option at the fixed price or refuse it and return the player to their parent club. Meanwhile, an obligation to buy means the loan club must trigger the clause and complete the permanent transfer at the agreed-upon price.
The option to buy is the more common practice, as it gives the loan club some flexibility to make a decision based on the player’s performance throughout the loan.
The obligation is usually kept to specific circumstances, often mid-season transfers, where it’s neater to complete a six-month loan before triggering a permanent move. This tactic is often used for bookkeeping purposes where either the parent club, loan club, or both wish to leave a permanent move to the summer for their accounting.
Can loaned players be returned early?
A loaned player may have their loan cancelled early, but this is rare and often involves one or both parties coming to an agreement to do so.
There are two circumstances where this is most common.
First, the parent club experiences some sort of imminent need, such as an injury crisis, which leaves them few options at the player’s position. In this situation, some loans have a break clause that the parent club can activate to return the player. Usually, this comes with some form of compensation to the loan club, usually a monetary fee.
A second situation that could see a loan cancelled is that the player, through either injury or poor performance, has not earned the on-field minutes that would have made his loan purposeful. Thus, the two clubs could come to a termination agreement by which the player would return to his parent club, either to train in a more familiar environment or sort out a new loan where he could earn more playing time.
In this situation, it is often mutually beneficial for both clubs (and the player) to see the loan cancelled, and thus there is usually little or no compensation required in either direction to complete such a termination. This can either be done by mutual agreement, or the parent club may trigger a clause in the loan deal if there is one.
Are clubs limited in how many loans they can have?
FIFA has a mandate that clubs may not have more than six players loaned out and six players loaned in at any one time, but some leagues place further restrictions on this.
The purposes for these limitations are two-fold. Firstly, they keep bigger clubs from stockpiling talent and controlling the majority of young players, which would leave scraps for the rest of the youth development systems in the area.
Secondly, they keep smaller clubs from leaning on loans for the majority of their roster construction, which is a dangerous prospect as opposed to building a more permanent squad.
Premier League loan rules
In the Premier League, clubs by official league rule (which notes loans as a “Temporary Transfer”) are limited only in both how many incoming players they can have on loan.
- A limit of four loan players may be registered on a club’s roster at one time, with no more than one from the same club and no more than two from other Premier League clubs.
- A club may not loan out a player they have acquired that same window to another Premier League club.
- A Premier League club may loan not more than 1 of its goalkeepers to another Premier League club.
As they are not restricted by league mandate, Premier League clubs adhere to FIFA’s limitation of six concurrent outgoing loans.
Of note, these restrictions do not apply to players under 21 years old, or those who are considered “homegrown” talents, meaning a club can temporarily offload as many youth players as it wishes. A “homegrown” player is one who has been at the current club for at least three years between the ages of 15 and 21.
