Similarities and differences between loans and credits
It is important that we bear in mind that loan and credit are not two synonymous terms since we are speaking about two completely different financial operations. Nevertheless, many people use both terms of indistinct form simply when it is a question of realizing an operation where there is of for way a quantity of money that will be given by a financial institution, with the obligation to return the above mentioned quantity with an extra one (the interests). Nevertheless, although a loan and a credit could look like the same we must say that substantial differences between both exist and it is important that we know them; first of all we must bear in mind of that there talks each other each of these financial operations since precisely of the definition separated between loan and credit it is where the above mentioned difference will be reflected.
On the one hand when we speak about loans we are referring to a financial operation in which a lender who can be any type of financial or bank institution, and up to even a particular person it delivers his client, certain requested quantity of money that has to be amortized in a period of time depending, of course, in the previous agreement between both parts, being able to be said amortization, monthly, quarterly or half-yearly.  For his part, the credit talks each other of a limit of money that usually grants to itself the one who requests it, inside the ambience of a credit account that generally is acquired in any bank.
Now then, we can say that the essential differences between loan and credit can be summed up basically in, for example, the payment of interests, where the credit will only force us to pay interests in the capital that one has arranged, of the whole that has been granted, and in case there should no be dispuestote any quantity interests will not be generated; for his part in the loan, it is necessary to pay interests in the entire quantity of the granted money. Also we can find the difference between loan and credit in the capital deliveries, since in case of the credit the entity grantor will realize different deliveries of the money, up to the maximum limit that has been requested, but when it is a question of a loan, must say that the financial institution should deliver the entire quantity of the money at the same time that the formalization of the contract is do effective. The third basic difference that we can indicate between the loan and credit there are the period of return with which one works; the credit can usually be renewed in several occasions once the same one has expired, but for his part, the loan must be paid in the term that has been agreed in the corresponding contract since otherwise it would be necessary to re-formulate a new contract, or it is possible to resort also to a debt refinancing plan.
When to resort to a loan or on a credit
It is important that we bear in mind that the purpose of the requested financing is determinant to be able to choose between resorting to a loan or credit; in this case we must say that the best product will be that that more is adapted to the specific needs of the person who requests it. This way if it is desirable to invest in a product of which his price or his cost is already known in advance (a vehicle, a housing, etc.) it will always be better to resort to a loan. This financial tool is usually destined for the acquisition of goods that are characterized for being of long duration and in most cases there talk each other of loan personnels that strain to grant individuals to him for his private use.
 Now then, we can say that this factor is determinant between the difference of loan and credit since in case of the credits, we will say that the same ones are much more useful for professionals or businessmen, since the same one helps them to confront the momentary absences of liquidity and also, because his investment is placed in those products that can sell again. In case of talking each other of a person with regular income that want to have some capital as the needs that could arise in every moment, the credit is usually a very useful element.
Finally we mean that financially, the loan and credit consist of a funds service to a third person during certain period of time, but as well we said at the beginning of this article that it is important to know the differences between they. The loan and credit can be formalized by an intervention of federato public or simply by means of an insurance policy; the latter procedure is usually much simpler and economic although in many cases, if we refer particularly of to the loan mortgage, the same ones usually demand a public writing. |
