Unless we have a certain financial culture, probably each and every one of us has confused the terms ‘credit’ and ‘loan’. Surely we will have used them without distinction to refer to each other, and we will have said that “I have to ask for a loan” or “I am going to ask for a loan” believing that they meant the same thing. The truth is that they are very different, and it is convenient to be clear about a few concepts about credits and loans:
- In the loan, the financial institution makes a fixed amount available to the client and the client acquires the obligation to return that amount plus agreed commissions and interests within the agreed term.
- In credit, the financial institution places at the customer’s disposal, in a credit account, the money it needs up to a maximum amount of money.
- The loan is usually a medium or long-term operation and amortization is usually made through regular, monthly, quarterly or semi-annual installments. In this way, the client has the opportunity to better organize himself when it comes to planning payments and personal finances.
- Generally the loans are personal and are granted to private individuals for private use, therefore, usually require personal guarantees (guarantees) or collateral (pledges or mortgages).
- In the loan the amount granted is normally entered into the client’s account and the client must pay interest from the first day, calculating the interest on the amount that has been granted.