Credit and loan

  • By admin
  • October 7, 2019
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If you’ve ever wanted to borrow money online, you’ve certainly come across two related concepts: credit and loan. They are often used interchangeably as synonyms. It turns out that there are quite a lot of differences between these two ways of raising money. Credit and loan – although there are many differences, there are also many similarities. Formally, however, these are two different concepts and are subject to different laws.
What is a bank loan?
The simplest way to put it, bank credit is a bank transfer of a certain amount of money from a bank to us for the time specified in the loan agreement. All issues related to credit costs (interest rate, commission) are included in such an agreement. It should also include provisions on the terms and conditions of loan cancellation, any penalty fees for failure to pay on time, and so on. A bank loan may be granted only after a positive creditworthiness assessment. The maximum amount of credit we can receive depends on it. The amount we apply for is not relevant. The bank will still offer us only the amount of credit for repayment that our creditworthiness allows us to offer.
Definition of a loan
As far as loans are concerned, this is a much broader concept. A loan can be granted to us by a natural person. It is not a concept reserved only for banks or financial institutions. In the case of loans, by definition, we do not need to give the purpose for which we need to borrow money. In the case of loans, we sometimes have to state where we are going to spend the money we borrowed, but not always. All the rules on how to repay a loan are regulated in the loan agreement. They are agreed between the lender and the borrower and the assumptions are not too restrictive.
Credit and loan – How do they differ?
The main difference between credit and loan is the law that governs these two financial products. All credit-related issues are regulated by the Banking Law Act of August 29, 1997. According to its provisions, the form of credit is reserved only for banks and no other institution or company can grant it. As far as loans are concerned, all legal issues are regulated by the Civil Code. A lender may be either a legal person or a natural person. It is also noteworthy that the funds intended for loan disbursement are not owned by the bank, but by the entities that have deposited their funds in bank accounts. In the case of loans, all disbursements are the property of the company or the person granting the loan. It is also worth noting that for smaller amounts of loans, no written agreement will be required, which is necessary in every case of credit.
How to choose the best offer on the market?
Choosing the most suitable offer on the market is not as simple as it might seem. The Internet is saturated with a variety of offers. All of them are referred to as promotional and the best ones. In order to have an overview of all offers, it is worth visiting one of the credit comparison engines. They apply to both bank loans and loans. You will also find special comparison engines and rankings for mortgages.
The principle of operation of each of them is the same. In their database they have information about the current offer of all banks that have agreed to provide such information. After entering the amount we are interested in in in the appropriate form, we will receive calculations regarding the costs of each loan and the amount of the installment. The repayment period can be freely modified so that we have a perfect overview of how, with the extension of the repayment period, the total cost of the loan expands exponentially and the amount of the monthly installment decreases.
Once we receive the appropriate calculations we should first compare the RRSO values in all offers. This is the most reliable method of comparing loans and credits. Although we look at the amount of the instalment for the first time, we must be aware that the lower the instalment we pay by extending the repayment period, the more interest we will pay in the end. Comparing the value of APR, we can easily see that in the case of bank loans, we can easily find promotional offers of 10%. In the case of loan companies, it can be even several hundred or several thousand percent. At first glance you can see which option is more profitable.
Credit or loan?
Everything really depends on our creditworthiness. If you have it, it is worth to take advantage of the bank’s offer and take a cash loan. Although the whole process may take a little longer, we will save a lot of money. In extreme cases, when we do not have the appropriate creditworthiness, or when we need money “for now” we can use the offer of a loan company.

Credit and loan
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