Credit and loan – how do they differ?

 

There are many financial products on the market that are used by more and more people every year. Some terms are used interchangeably, but in practice they do not mean the same thing at all. Loans and loans are examples. Both services involve borrowing money for a limited time, but at the same time there are a lot of significant differences between them. What connects them and what divides them? When is this option worth attention?

When we talk about loans and credits, we don’t think about whether they mean the same thing. It is obvious that we take money from a financial institution for a given purpose and we have to give everything back by the given date. Still, the exact rules for granting, paying off, and even interest costs are quite different. Each of these options may be attractive to a different group of recipients. That is why it is worth pre-thinking what possibilities we have and what is profitable for us. So credit and loan – what connects them and what divides them?

Basic differences between a loan and a loan

Basic differences between a loan and a loan

The biggest difference between a loan and a loan lies in legal regulations. In fact, they result in what the other differences are. The loan is only granted to the bank and is always granted in accordance with the Banking Law and the Consumer Credit Act, the Civil Code. In all these documents there are many restrictive provisions that clearly specify all the grounds. Loans can be granted by non-bank financial institutions and even individuals. The rules related to their granting and repayment are only regulated by the Consumer Credit Act and the Civil Code.

What is the difference between a loan and a loan in connection with the above-mentioned regulations? Banks must follow certain procedures. Before we get a loan, we must complete many formalities, filling out the application is just the beginning. In addition, the bank may ask for a statement of earnings, check our creditworthiness, verify that our name does not appear in the debtors’ databases. It always goes on. In the case of a loan, the lender does not have to stick to the type of formalities, which means that we can get a loan much easier. Often, even in such situations, when the bank gives a negative decision, non-bank financial institutions will be able to help. Even the unemployed can apply for a loan!

Interest and costs are another issue. Again, banks have slightly tied hands and cannot encourage customers, for example, at zero costs. The loan agreement is always payable. The difference between a loan and a loan is that non-bank financial companies can offer more and more interesting loan offers, including free ones. If we think carefully about everything, it may turn out that we will not incur any additional costs for the loan.

When going to the bank, we must specify the purpose for which we need money. In the case of loans, this is not obligatory. The loan repayment is always in installments. However, when it comes to the loan, the lot depends on the amount and the contract you sign. Payday loans are usually repaid once and the deadline is usually several dozen days. However, sometimes the amounts are high and the conditions may include installment payments.

What connects loan and credit?

What connects loan and credit?

As you can see, both financial products share a lot, but there are also some common elements. Loan and credit – how similar are they? First and foremost, in both cases, there is a commitment that we have to settle. In addition, in both cases we can, but we don’t have to, sign a written contract (with a loan of up to USD 1,000 it can be oral), and spread the commitment into installments. Both products may be payable, because the loan is free only for new customers of loan companies who have the first commitment in this institution.

What to choose?

What to choose?

There is no definite answer to this question. We need to think about what the possibilities are and what exactly interests us. If we care about high amounts that will be spread over a long time, and we have a stable professional situation and we do not have overdue obligations, it is worth considering a bank loan. If you have doubts about your ability or presence of a name in BIK, you have to reckon with a negative decision. However, you may consider visiting or contacting via the website with the loan company. But you do not have to treat it as a last resort – there is no shortage of situations in which a loan pays off more than a loan.

When we care about time, reducing formalities, and thus also shortening the entire procedure, then a loan will be a good idea. In the case of the bank, we wait at least a few days to process the application, while the loan means money even on the same day. A loan will be a good proposition for us if we need money for a short time and the amount is small, for example several hundred dollars or several thousand. Then we can also take a payday loan, which will be free. In this situation, it is the most cost-effective option. In this way, we do not have to bear interest costs.