Quite often, ordinary people have to deal with concepts such as loan and credit. And many believe that this is one and the same. But there is a rather big difference between these terms. Let us consider in more detail what court and credit are, what is the difference between these concepts and whether there are similarities.
The concepts
In everyday life, a loan should be understood as a banking operation to provide a person with funds subject to repayment, payment, urgency and guarantee. In a broad sense, credit is a cost economic group, which is an important element of commodity and monetary relations.
A loan is understood as one of the types of economic relations that are secured by a loan agreement between the lender and the borrower. On terms of repayment, the parties agree on the transfer of goods or cash for temporary use. This service can be provided on a fee or for free basis. The latter is not accompanied by interest payments to the lender. Next, consider the difference between a loan and a loan.
Credit
Based on the concept of credit, it has the following properties:
- Urgency. Funds may be issued for a specified period and must be returned within a specified period. And they come back with interest.
- Paid. Any citizen has the right to take a loan, paying off interest.
- Returnability. It is necessary to return the funds without fail with interest and on time.
- Monetary equivalent. The difference between a loan and a loan is that a loan involves the issuance of cash. Money can be received on hand, and the bank can transfer it immediately to the organization that sells the goods.
Loan
A loan is a more general concept, and credit is to some extent included in this concept. A loan includes not only taking funds, but also goods, property, values, equipment, etc.
When it’s not about cash, an important point is:
- the inability of the borrower to become the owner of the property;
- property is rented, not borrowed.
Loan and credit - what is the difference and their differences? A loan involves borrowing any movable property or real estate. Many consider this the most profitable option, since the loan has only repayment.
Main differences
Credit and loan - what is the difference if a contract is signed in both cases? But the loan agreement indicates the maturity, principal, interest rate and interest themselves, as well as the basic conditions for the return of funds. If we are talking about a loan agreement, then the document may contain only information about what was given under the loan, as well as information about the payment of bonuses for the services provided. In any case, we are not talking about interest on the use of a loan. In the loan agreement, in principle, the issue of any payments and premiums, as well as terms, may not be raised.
Therefore, the main difference between these concepts is that the loan implies interest, but the loan does not.
If premium documents are indicated in the loan documents, the borrower can pay with goods, products or services, which is also specified in the contract. For example, if the borrower takes the equipment for agricultural work, then together with it he can give some of the received products as bonus payments. This is quite beneficial, as the borrower does not give back his money. He used the technique, received products, some of which he can give in the form of payment for the services of the lender.Despite the commonality of the concepts of loan and credit, what is the difference between them is clearly traced.
What is more profitable
A loan and a loan, what is the difference between the concepts - we found out, but what is more beneficial for the borrower? In this case, you need to proceed from the fact that they borrow. If we are talking about cash, then the lenders are in no hurry to part with their money on the specified conditions. But financial institutions are willing to provide loans at certain interest rates. With this money you can buy any movable or immovable property.
If the loan is issued in the form of cash, then the contract shall indicate the premium part of the lender without fail. In this case, the borrower, before contacting one or another organization, needs to compare all the pros and cons. If the size of the premium when issuing a loan exceeds the total amount of all payments on the loan, then it will be more profitable to take a loan. In other cases, you can take a loan. Both individuals and legal entities can issue loans. Loans are granted a priori by legal entities.
If the future borrower knows that a particular person has the equipment or equipment he needs, he will go to the lender, and not to the bank for a loan. Example: a businessman needed a special vehicle that the lender has. He can turn to him and take the transport into use. At the end of the period, the businessman returns the property and pays a premium for the service provided. In this case, a loan is much more profitable than a loan. Moreover, the premium can be not only in monetary terms, but also in the form of barter.
But what to choose is a purely individual decision of the borrower.
Key similarities
We examined what a loan and credit are. What is the difference between the two is already understandable. Are there any similarities? There is one and most important thing - in both cases, borrowed funds or property must be repaid, whether it be a bank or a lender. As for the loan, the amount of money is returned on time with interest and payment of a commission for the use of money.
If we are talking about a loan, then the contract may both provide for and not provide for remuneration from the borrower. Moreover, this remuneration can be transferred both in the form of money, and in the form of products obtained from the use of technology.