– Flexibility : the credit is more flexible than the loan since the user can have the money he needs at any time within the credit limit established in the contract.
On the other hand, in a loan the delivery of the money is made after the signing of the contract .
– Terms: the loan is an operation with a closed and determined life cycle , since it includes precise repayment dates. Instead, the credit is an open operation , where the client can request gradual amounts until reaching the established limit.
– Interest : the credit usually has higher interests than the loan . However, the difference is that in the credit you only pay for the use (even if the limit is higher). For its part, interest is paid on the loan for the entire amount received from the first moment.
– Purpose : credit lines are used in general by small companies or freelancers looking for a “cushion” to which they can resort in certain moments of lack of liquidity . For their part, loans are usually intended to finance one-off purchases of relatively high amounts by individuals .
– Refinancing : in the case of the loan, it “dies” when the debtor pays the last installment. On the other hand, the line of credit allows renewal, as many times as you want.