A loan with an obligation to buy is a transfer structure in which a player moves to a club temporarily, but that club must sign them permanently once agreed conditions are met, such as appearances played or promotion. It differs from a loan with an option to buy, where the permanent deal is a choice, not a requirement.
The structure is especially common in Italian football, where clubs have long used a paid loan with an obligation to buy, known there as prestito oneroso con obbligo di riscatto, to spread a transfer fee across two accounting periods and ease the pressure of financial fair play rules in a single summer.
It gives both clubs something. The selling club gets a fee it can treat as close to guaranteed, and the buying club gets a season to assess the player, and to spread the cost, before the signing becomes permanent on the books.
The risk sits with the buying club, because the obligation triggers whether or not the loan spell has gone well. A player has to be signed permanently once the agreed conditions are met regardless of form, which is why clubs negotiate those conditions as carefully as the fee itself.