Differences between credit and loan
Credits and loans, concepts
Today we tell you the differences between credit and loan . Two concepts that are used interchangeably to define ” borrowed money ” and that in fact are not the same.
Surely we will have much to blame for the confusion in the use of these terms, loans-loans , professionals in the sector, since for commercial reasons we use the two definitions, which causes confusion in the user. In advance we apologize for the part that touches us;), when talking about microloans , mini loans or mini- credits , to present the same product. Advertising
But what are really the differences between the two concepts? Let’s see what our editorial team tells us about this common question.
Differentiating between credit and loan
In colloquial language, we often use the word loan and credit as if they were the same, but the reality is that it is not so. That is why today we are going to explain to you what are the differences between credit and loan and why you have to know them.
Loans: that money we ask to buy our house or pay for a master’s degree for our son.
In the case of a loan, we are talking about a financial transaction in which a person or an entity gives someone a fixed amount of money, for example to finance vacations or the purchase of a vehicle, in exchange for their return within a certain period , which is usually long and therefore of late amortization, through periodic quotas that are usually monthly, but may be quarterly, semi-annual or even annual depending on the case.
In addition to that, the entity and person will charge interest for the money lent . Depending on the amount, guarantees or physical guarantees are also usually required such as real estate, vehicles, insurance … that “insure” that amount that the bank lends to the client.
Individuals are the most used loans to buy houses, pay for studies, vehicles or any other service or whose price is too high for a person to pay it at one time.