You urgently need money, but you are still thinking about whether to decide to take a loan or credit? From the content of the article you will learn, therefore, what is the difference between these two obligations and which of them can be a better solution for you.
Credit and loan by law
The loan agreement is subject to banking law. This means that only banks can grant loans, which are not authorized by non-financial institutions. Even if they have in their offer financial support called a loan, we are really dealing with an ordinary loan.
By juxtaposing huge banks and non-bank loan companies, it may seem to us that the latter are doomed to lose. Nothing could be more wrong. In fact, it’s quite the opposite. Banks do not actually have their own money for loans, they have other people’s money, so they are only intermediaries. Financial institutions, obliged by the Civil Code, on the basis of which they operate, are prohibited from disposing of third party funds. Does it affect the price of the loan? They have, and it’s colossal. Let’s assume that borrowed money is a specific commodity that goes from the producer to the customer. Banks are an intermediary and loan institutions the equivalent of a producer. So where will the customer pay less, from the manufacturer or after paying brokers? The answer is obvious. This is the most important reason for both high bank loan prices and low non-bank loan prices.
Form of transfer of funds
If you decide to take a loan, you have no other option to receive money other than by transfer to a bank account. However, the loan is flexible in this respect. Money can therefore be transferred both by bank transfer and in cash. There is no need to specify the exact purpose of borrowed funds, as is the case with credit. The amount of debt can therefore be spent in any way depending on the customer’s preferences.
Formalities and mandatory procedures
In terms of formalities necessary to comply, the loan is definitely a more flexible form of borrowing. The customer wanting to receive a payday loan at the loan institution must only provide a personal ID (or scan), complete a personal form, and confirm the knowledge of the terms of the contract with their own signature.
In the case of credit, it is necessary to comply with a number of complex procedures. First of all, the bank must have reasonable certainty that the borrower is a credible person with the ability to repay for the duration of the commitment. Therefore, a positive history should be demonstrated in the credit information databases. For this situation to occur, the customer should until now pay back all loans within the prescribed period, and be able to prove a regular source of income for a sufficient amount.