4 differences between credit and loan

Credits, loans,mortgages … In the current economic situation we are living, these words have become more common than ever. Not only because of the need we normally have to resort to financing, but because of the recent concern about the conditions of these financial products.

What is a loan?

The loan is an agreement between two parties, a lender (which is usually a financial institution, but can also be a friend) and a borrower (client or beneficiary), through which the first one lends a fixed amount of money to the second, which undertakes to return it within a stipulated period, either once or in several installments. This agreement usually carries some interest for the borrowed money, which is usually a percentage of the total money lent and is usually paid in the form bad credit payday loans of regular installments.

Mortgages are a type of loan, with specific financing characteristics.

What is a credit?

A credit is a financial aid service that consists of the outlift making available to the beneficiary a maximum amount for it to have it as they need it. In this way the interests are higher since it is a smaller amount of money that you can have at your disposal at any time.

One of the most common ways to access a credit is through the credit card, a tool to have money that we do not have in exchange for paying interest proportional to the amount used.

Credit cards usually have two types of interests:The first are those related to the money that we are using and also, we pay a few second interest, because we have the rest of the money at our disposal to use it at any time. In addition, this service includes commissions for maintaining the credit card, since this is the way that allows us to access credit at any time.

These types of credits have a short return time, which normally goes between 30-40 days of return, but you can also return them in less time, resulting in a lower interest.

You only have to fill in how much money you need, how long and the interest that will be charged will appear on the page.

Main differences between credit and loan1

1. Interests

With the loan we only pay an interest rate, proportional to the money we borrowed at the time of the agreement, and it is paid regularly until the money is returned.

In the case of credit, a specific interest is paid corresponding to a percentage of the money that we use at a specific time.

2. Amount acquired

The loan is usually used to access large amounts of money, either to finance the purchase of a house, a car or a project that we are undertaking, but almost always a planned expense. This makes the total interest also taller.

3. Return terms

The loan is usually a long-term financial service, to finance expenses with a longer stipulated term of return of the borrowed money.

To request a loan, you must attend a bank in person, carry all the necessary documentation and have a clean file.

Loans are often used for larger investments already planned and with a long-term repayment, usually in the form of regular installments to which