What is the difference between a loan and a loan?

Although the terms credit and loans are often used interchangeably, many of you may be surprised, but these issues differ. Credit and loan are not necessarily the same. These are concepts that are often confused by customers. See how they differ!

There are four parameters that distinguish these two concepts

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Both issues are very similar and in practice they end up borrowing cash from some institutions and paying interest rates. However, the devil is in the details. For some of you this will certainly be a curiosity in the field of law, and for others it will be something helpful if you consider making a commitment.

It is important to understand that credit is a word that is reserved only for banks. Banking law says that only banks can grant a loan . If we sign a loan agreement, it must be in writing and it involves a number of rights. The contract must include information specified by law.

A loan is definitely a broader concept

A loan is definitely a broader concept

Today, there are many parabanks or institutions that provide loans. Of course , loan companies in Poland also write down a document that sets out the most important information about the loan.

The second parameter that distinguishes a loan from a mortgage is their purpose. In the case of a mortgage, the loan is granted to the borrower for a specific purpose, for example the purchase of an apartment, house construction or refinancing of another loan. It is often later controlled by banks whether the money from the loan has actually been allocated to the purpose specified in the application. In the case of loans, on the other hand, there is no specific purpose, so the purpose is arbitrary.

For loans and mortgages, the difference is also due to the price

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The loan installment is usually lower than the loan installment. Therefore, it is certainly advantageous to take out a loan with a specific purpose than loans with a specific purpose.

The difference is also often due to the maximum value of loans and mortgages . For loans, the percentage of the property value that we can take out a loan for is lower than for a mortgage .

It is worth remembering that regardless of whether you are taking a loan or a loan for working abroad, you should carefully check all the conditions contained in the contract and annexes. All records should be understandable and transparent to us. In practice, therefore, credit and loan are very closely related , but they are other issues that are reserved for specific entities.

Credit and loan are often interchangeable terms. When planning external financing it is worth remembering that these words do not mean the same.