Credit or loan: how do they differ?
Credit or loan ? What to decide when we want to buy new home appliances? Which will be a better option when planning to buy a car? Contrary to appearances, the choice is not so obvious, because the loan is governed by its own rights, completely different from credit. What exactly are they different and do they have any common features? Why do we confuse them so often?
What is a mortgage?
The loan, according to the Civil Code, which exceeds over $ 500, should be written and confirmed in a specific letter. This means that the lower amount can be borrowed, by means of an oral agreement, which is equally significant under the law. Its value can be any, and the letter does not decide and does not specify the specific purpose for which such a loan is to be intended. This means that the loan is to be used for … whatever we want. Granting it is mainly in the hands of the bank (but not always, other companies offering loans are popular) and is one of the more popular products offered by specific institutions. The choice of loan should be based, of course, on the interest rate, APRC , commission and all “additional” costs that may arise during its taking. Taking it is much easier than taking a loan, but unfortunately, its repayment conditions can be extremely unfavorable.
What is a mortgage?
The loan is taken by a properly created Act – Banking Law. This means that we take a loan when we need a clearly defined amount for a given purpose. Its repayment is strictly imposed from above and clearly defines the time frame, repayment dates, installments, etc. Loans are only granted by banks, offering a really wide range of services. The loan loan is uneven, which is why we have a lot to choose from on the market if we decide to buy a car or a new apartment. Here, the choice should be dictated by the repayment period, the size of installments and the interest rate. Despite the bad credit, most of us will be forced to take it sooner or later. It is worth highlighting student, car or mortgage loans – they all differ and they all offer completely different conditions. Importantly – the bank has the right to control these expenses and check for what purpose they were actually spent. In addition, the loan agreement is subject to the so-called hedged. This means that the bank, as part of the repayment guarantee, often expects a pledge against the mortgage or (which is definitely less often) – promissory notes.
Mortgage loan and mortgage loan
Following the above descriptions, we distinguish the main, leading differences resulting from these two ways of financial support.
- loans are granted only by banks – loans, they can be granted by payday loans or by natural persons
- the loan involves the payment of interest due to repayment in specified installments – in the case of loans they are not always payable
- a loan of less than $ 500 does not require a contract or other documents (it can be stamped orally). Taking out a loan is connected with a written declaration, a written agreement and its absolute subsequent compliance
- The loan usually has a specific purpose (e.g. a car loan for a vehicle and a mortgage on real estate), which can then be checked. The loan may be taken out for its own, unspecified purpose.
- due to the fact that the loan is granted by the bank – its granting generates less risk (mainly due to the Banking Act), and the rules are known from above
- the loan cash does not become the property of the borrower and must therefore be returned
- loans do not have to have a specific repayment date and can be given in cash
To sum up, therefore: the loan is less formal and is rather undertaken by private individuals who immediately need financial assistance (especially with a relatively small denomination). On the other hand, loans have strict regulations and are more willingly taken by enterprises. Hence, a loan is a better choice when you decide to buy an apartment.