Credit policy – Differences between credit and loan

Credit and loan

While the term is used synonymously credit loan, credit is actually a broader term for cover: the credits, personal loan, mortgages and even credit cards.

If we try to understand the differences between a credit (called in many cases a credit facility or a treasury operation) And consumer lending, we have: The credit is short, usually less than one year, but the personal loan usually has a longer duration between 24 and 60 monthly.

The credit is associated with a checking account with a drawdown limit agreed. In the current account can withdraw or deposit money, so the balance of the creditor or debtor may be for us or against us.

In the loan the bank gives us a quantity that enters into our account and have it completely, however credit is more flexible since both the layout No return of funds as their are at our discretion.

The calculation of interest is different: the loan is calculated at the beginning and added in the fees we pay. The credit will be calculated in accordance with the provisions of money you make, although it should be noted that banks in these operations we charge small amounts for unwilling capital.

Credit is an optimal formula to cover temporary liquidity situations. We leave the money at a time when we are short of it, but it is expected that this will change soon so that full cancellation is allowed at one time without penalty. This type of operation is suitable for companies, professionals and government.

The loan is more suitable for people on fixed incomes, which is easier to agree to monthly fees that can cope without much trouble.

He has appeared on the market a new product, known as cash loan, which being essentially a credit policy and functioning as it allows the realization of monthly payments, in an amount previously agreed, which enables the policy expires, to completion, the outstanding principal is less and therefore easier return.

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