what they are and how not to confuse them

In common parlance, loan and financing are used practically synonymously, but from a technical point of view they are two concepts to be kept distinct. Here are the characteristics of both and the substantial differences.

Today it is very common to hear about financing e loan: many, for needs related to the expenses of their family or to support their entrepreneurial activity, may need them, at a bank or a financial institution.

Usually the common man tends to use these two words as synonyms, not believing that there is any substantial difference between them. Well, something identical financing and loan, they actually have. In fact, both give rise to the transfer of a certain capital of money granted by the bank or a specific credit institution to the benefits of a customer who respects specific characteristics and requests.

Below we will focus on both of these two concepts of the world of finance, to understand once and for all why and how they must be kept distinct. This is in order not to be found unprepared in the circumstances in which there is a need to turn to an ad hoc company, for said liquidity payments. Let’s take stock.

Financing and loan: what are the differences

As just mentioned, if a private person or an entrepreneur needs money, he can refer to the various solutions proposed by the credit institutions; banks and financial companies operating in the reference area. Each will propose its own conditions, and therefore it will be the one who applies for the loan or loan who will have to carefully evaluate the costs and methods of repayment. To do this, of course, he must know a priori what the distinction is between financing and loan. Only in this way will it be possible to choose the best for your needs and purposes.

We can anticipate that financing is a broader concept than that of ‘loan’, but this is not enough to clarify the precise difference between the two concepts. However, the term financing is divided into further concepts such as mortgages, credit cards and loans, but not only. In other words, if the loan is the ‘kind’, the loan is part of the so-called. ‘species’.

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Financing and loan: how to choose one or the other?

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