Differences between a loan and a loan. Check before you make a decision

In articles, the word credit and loan are often treated as synonyms. In fact, almost all bank customers do the same, treating loans and credits as the same banking product. Meanwhile, there are huge differences between the two.


Credit and loan are two different, though similar, banking products. If someone needs money and is considering a financial commitment, they should find out the similarities and differences between these two seemingly identical offers. Thanks to this, it may be easier to decide whether it is more profitable to look for a loan or a loan and what you can count on in both cases. 

Credit – clarification of the term

Credit - clarification of the term

A loan is a type of written agreement between the lender and the borrower, under which the lender offers the borrower funds of a certain amount. The borrower undertakes to repay the loan within a specified period and in the amount also taking into account interest for the loan period. In principle, this description also applies to the loan to some extent. Only that the rules for granting a loan are established by the Banking Law, and the loan agreement can be concluded even orally. The loan must always be agreed in writing and both parties sign the contract, which is tantamount to accepting it.

In addition, the loan is granted for a specific purpose. So it can’t be that the borrower announces to the lender (which must be a bank) that he needs money to add the missing cash to buy an apartment or to buy a car, and then devotes all funds to, for example, an exotic vacation. In this case, the bank has the right to control what the funds are spent on – the purpose of the loan is also clearly indicated in the signed loan agreement. 

Loan – clarification of the term

Although the terms loan and credit are often used interchangeably in colloquial terms, these terms describe different things. First of all, basically anyone can grant a loan – all you have to do is have the right financial resources to do it. It can even be a family loan or friend. You can not borrow money, but also lots of other things. Even at the wedding the bride assumes “something borrowed” and it is basically the same loan as incurring a debt in the amount of, for example, 200 or 300 zlotys. The difference can, of course, be in the value of these loans and in the fact that the latter is a cash loan.

The loan agreement is regulated by the provisions of the Civil Code. This code informs that the borrower – on the basis of the concluded contract – undertakes to return the item or money. As for things, they must be specific about the species, but not necessarily specific about the identity. Another issue is the fact that the loan can be concluded for any purpose that does not have to be specified in the contract, and this contract does not even have to be in writing. To be binding, it may well be concluded orally. Moreover, it can be provided for a fee or free of charge.

Credit and loan – differences

Credit and loan - differences

Thanks to an accurate explanation of the dates, it is easy to recognize what the differences are between loan and loan. Although these names are often used interchangeably, there are really huge differences between the two situations. In principle, the loan is not just a banking product. It becomes a loan if it is given by a bank, but someone may as well borrow money from their brother and this is also a loan. In fact, subconsciously, probably everyone in this situation says that they “borrowed” something. There is no question of taking out a loan, which is associated – and rightly so – with a financial liability.

However, it is worth specifying again what is the difference between a loan and a loan. First, the loan must be in writing and the loan may even be an oral contract. Secondly, the loan is only granted by the bank when anyone can grant a loan. Thirdly, the loan can relate not only to money but also to things. Fourthly, you do not need to provide proof of income and other creditworthiness documents to obtain a loan. Fifthly, the loan can be granted for any purpose when it needs to be specified in the case of a loan. Another issue is the issue of payment – the loan agreement is usually payable, and in the case of a loan it all depends on the arrangements between the parties to the agreement. The loan agreement is also secured. 

Credit or loan – what is more profitable?

Credit or loan - what is more profitable?

The loan is more formal – it works on the basis of other legal provisions and does not leave too much room for modification. Of course, everything depends on the contract concluded between the parties to the loan agreement, but it is written and binding – you cannot delay the repayment deadline or arrange with the bank that everything will be paid next month. The loan is granted for rather large amounts of money, which is why it concerns, for example, the purchase of a vehicle or apartment. Meanwhile, loans are a good option when you want to incur only a small debt – for example, to repair a washing machine or for a trip. Loans are more private in form. Loans should therefore be taken for a short time – otherwise (for example in the form of installment loans) they become more expensive than loans. This is mainly due to the better security required for a loan. Less formalities and easier accessibility (even online) mean, however, that most people get loans much more often. 

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