How differentiate a credit of a loan

The credit card and the loan they are two types of financing that they can use provided that there is a need of money to undertake a project or the acquisition of a good. Many a time are used such as synonyms, but suits take into account which are the differences between these two terms to know in what consists each and when is recommendable to request one or another.

A loan is the operation through which one is delivered fixed amount of money to the applicant, who owes return her in certain fees during a established time scale together with the interest agreed with the company.

A credit card offers the user one limited amount of money, which the applicant can go arranging as it is him necessary. The refund of the lent money can do for fees or of only once. In both cases, this operation entails the payment of interests, as happens with the loan.

The ones responsible for offer these loans and credits are the banking organisations and certain financial institutions authorised for this. In the case of the loans, it can be consumer loans, personal loans, of studies or mortgages.

Four keys that they mark the difference

As have seen, both types of financing share the idea of offering a certain cash amount that has be returned in a certain term and with some associated interests. However, there is four keysthat help to understand the differences between credit and loan.

• Repayment installment.While a loan can have a repayment term of until 30 years-as the mortgages-, a credit usually has a maximum term of refund one-year and sometimes exceptional until 3 years.
• Interest.Because of the speed of access to the money and the flexibility that involve the credits, this product usually entails a higher interest ratethat that one of the loans. In addition, in a credit the interest is applied only on the cash amount used and is generated a fee for the non willing part, whereas, in the case of the loan the interests are calculated on the total of the lent money.
• Available and aim amount of the financing. The loans are recommended for the high-value asset acquisition or real properties, as a house or a car, in which is required have great quantity of money and, therefore, the refund will be prolonged during a broad period of time.. Furthermore, the credits are directed to punctual needs of money and they allow addressing a situation of lack of liquidity, as it can be the payment of invoices or the purchase of materials in the case of a company.
• Terms and Conditions of renewal. The broad repayment term of the loans does not usually allow that they are renewed until the debt is settled. In addition, generally the loans allow the early amortisation, although sometimes it entails an additional interest. On the other hand, one credit facility allows its renewal, in that the debited amount is given back in the term negotiated.

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