What is a loan?

The borrowing entity, the bank, cashier or other entity, delivers an amount of money to the individual, legal entity or company that receives the capital. This amount of money must be amortized periodically, so monthly, quarterly, semi-annual or annual payments are made by the client to the entity.

What is a credit

It is an amount of money that is delivered to the customer through a bank account, which is used for capital management. In this process, the interest generated from the total amount borrowed is paid. In addition, the money can be delivered in successive account receipts. In contrast, in the loan, the total amount agreed is delivered in a single movement.

Differences between credit and loan

On the other hand, credits can be renewed on several occasions without this entailing a large number of procedures. On the contrary, a loan must be paid in full and to request another one it is necessary to sign another contract. This is one of the great differences between these two concepts.

credit differences loans

In addition, each type of service is oriented to a different use. Usually, the credits respond to a consumer need while the loans are made so that the customer can make payments that, otherwise, could not be made. A common example of a loan is a mortgage, which is paid over many years due to a large amount of money involved.

It is convenient to take into account the differences between these two terms although, it is true that they are often confused as synonyms. The online lender system so in vogue currently grants credits, because both the amount and the return period are limited and reduced. In addition, these small loans or microloans respond to the economic needs of individuals, and even small businesses. Generally, they are requested to make payments, make purchases or pay for services.

Nowadays, getting a loan is complicated due to the numerous restrictions of the banking entities. However, it is possible to obtain credits in these same entities or use the online microcredit system to get out of trouble in times of crisis.

So far today’s article. We remind you that you can visit the home page of our loan website www.paydaynow.net to be up-to-date with everything related to this type of financial products.