Loan or credit?

You are determined: you are going to buy the good that you need (or want) so much. But you are missing a few euros to pay it in cash and you have to finance it, so you consider asking for a loan. Or a credit?

Do you know how they differ from each other?

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Although everyone thinks it is the same, it is not. And here we summarize the main differences between loan and credit:

How you have the capital: in the case of the loan, this capital is available at one time and, normally, through an account deposit.  On the contrary, in credit, your bank makes available to you an amount of money up to a limit, which you can spend as you need it. In addition, normally, credit is not used only by depositing into your account, but also through other means, such as the card.

Interest calculation: they are paid, in both cases, according to the capital drawn down. That is, in the loan, for the total amount of it, and in the credit, as you use it. However, in the case of credit, the collection of a commission for the amount not drawn can be agreed.

How you repay the capital in the loan

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The capital provided is fixed, so it is common for your return to be agreed in regular installments, taking into account a period already known. Therefore, when you sign it, you are usually provided with an amortization table, which reflects each and every one of the payments you are going to face, as well as its breakdown.
In the case of credit, this does not happen, as the amount to be returned is variable. However, in the credit agreement they must clearly indicate the conditions for returning the capital. You also have the right to receive, at each interest or commission settlement, an explanatory statement of the calculations made.

Term: As we have mentioned, the loan has a certain fixed term. The loan must also have an initial term, although it is usual for it to provide renewals or extensions according to the provisions you make.

You can already see which product best suits your situation

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In any case, you should know that your bank is obliged to adequately explain the products and services it offers, so do not hesitate to consult before making a decision. In this case, it is especially important that, before opting for one option or another, it is clear to you how the fees are calculated, the existence of other possible costs or penalties, as well as the consequences that you would have to assume in the event of a possible breach by your part.

 

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