Credit or loan?
However, although in terms of urgent online loans and online credits are generally considered to be synonymous, in reality they are two different products .
To know well what to choose, it is convenient to know in advance the differentiation between both concepts, so we will know when these two words are considered as synonyms (credits and urgent loans) and when they really talk about two different financing products.
What is a loan?
A loan is the financial operation in which an entity or person (the lender) delivers to another (the borrower) a fixed amount of money at the beginning of the operation , with the condition that the user returns that amount together with the agreed interest. in a certain period.
The repayment or repayment of the loan is usually made through regular monthly, quarterly, semi-annual payments … or in a single installment during that period. Therefore, the operation has a previously determined life. An important part of a loan is that interest is always charged on the total borrowed money.
Basically, when we apply for a loan, we refer to a financial operation in which we ask an entity for a fixed amount of money. The condition of this agreement is that we return the agreed amount plus the interest generated within a certain period, although the interest will always be the same.
What is a credit?
This term refers to a “virtual” amount that the client can dispose of at will . A credit is the amount of money, with a fixed limit, that an entity places at the disposal of a client. The customer is not given that total amount at the beginning of the operation, but can use it according to the needs of each moment , using an account or a credit card.
In this way, the lender will make partial deliveries at the request of the client . It may be that the client has all the money granted, or only a part or nothing. What is the positive part of a loan? In a loan, the client only pays interest for the money that, in fact, he / she has used, but it must be borne in mind that in the credits, in occasions, a minimum commission is also charged on the unpaid balance.
In addition, the amount of a loan is not finite as the loan , but as you return the money may continue to have more, without exceeding the limit.
So, what is better a loan or a loan?
In comparative terms, a loan is not better than a loan and vice versa. Both are products that solve customers’ financial problems if they are used responsibly.
To choose one or the other financing model, you really have to make a small study of the economic needs of each one , since, as mentioned above, the credits, unlike loans, can be extended and repaid little by little, while in the loan conditions their full refund is required on the agreed date.
It must be taken into account then that the credits are more indicated and appropriate to cover the lags between collections and payments of the companies . That is, the credits serve to meet regular expenses that, although at the time can not be covered with the usual economy, you can have that money after a few days. It is a regular money that can be thrown away so as not to leave unpaid gaps. Very appropriate for those companies that have to face regular expenses.
While the loans are usually granted to finance the acquisition of a particular good or service : a car, some studies, a reform at home, a trip, some bills or even a sudden whim. That is, to cover a punctual payment that we did not have, or a payment that is not possible to cover the economy that is available at the time.
The credits serve more to cover lags between collections and payments and to face temporary periods of lack of liquidity. Therefore, loans are usually more suitable for individuals who need an extra injection of capital quickly.