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Leihen vs. verleihen

In German, both leihen and verleihen can translate to to lend, but they are not always interchangeable. The main differences lie in their directionality (lending vs. borrowing), the formality of the context, and an additional abstract meaning that only verleihen carries.

Leihen

A2
The verb leihen is the most common and versatile term. It can mean both to lend something to someone and to borrow something from someone. The direction of the action is determined by the sentence structure. For borrowing, it is used reflexively as sich etwas leihen. It is typically used in informal, everyday situations between people.
Kannst du mir bitte deinen Regenschirm leihen?
(Can you please lend me your umbrella?)
Ich leihe meinem Nachbarn selten mein Auto.
(I rarely lend my neighbor my car.)
Ich muss mir für die Prüfung ein Buch leihen.
(I have to borrow a book for the exam.)
Wir haben uns für den Umzug einen Transporter geliehen.
(We borrowed a van for the move.)
Sie hat mir ihr Lieblingskleid für die Party geliehen.
(She lent me her favorite dress for the party.)

Verleihen

B1
The verb verleihen exclusively means to lend or to loan and can never mean to borrow. It is often used in more formal, commercial, or institutional contexts, such as by banks, libraries, or rental services. Additionally, it has a second important meaning: to award, to bestow, or to confer something, like a prize, a title, or a special quality.
Die Bank kann uns das Geld für das Haus verleihen.
(The bank can loan us the money for the house.)
Diese Bibliothek verleiht auch alte Manuskripte an Forscher.
(This library also lends old manuscripts to researchers.)
Der Skiverleih verleiht Ausrüstung für Anfänger und Profis.
(The ski rental shop lends equipment for beginners and pros.)
Dem Film wurde bei dem Festival ein wichtiger Preis verliehen.
(The film was awarded an important prize at the festival.)
Seine ruhige Art verleiht ihm eine natürliche Autorität.
(His calm manner gives him a natural authority.)
Der König verlieh dem Ritter einen Orden für seine Tapferkeit.
(The king bestowed a medal upon the knight for his bravery.)

Summary

In short, use leihen for everyday, informal lending between people and for all instances of borrowing (as sich etwas leihen). Use verleihen for more formal, institutional, or commercial lending (from a bank, a library, a rental shop) and when you mean to award or to bestow a prize, title, or abstract quality. You can leihen a pen from a friend, but a bank will verleihen money.