A number of people mistakenly believe that there is no difference between the concepts of "credit" and "loan" and put them on the same level. In fact, there is a fundamental difference between them.
Loan concept
In a loan agreement, one party transfers ownership of the other money or other things, and the borrower makes an obligation to return the same amount of money. The main types of loans include targeted loans (such an agreement is concluded on the basis of allocating money for strictly specified purposes), state (under the loan agreement, the state acts as the borrower) and non-earmarked (such loans do not limit the direction of spending money).
Credit concept
Credit - social relations that arise between subjects about the movement of value. They can arise in various forms - commercial, banking, government, credit, leasing, factoring, etc.
In Article 819 of the Civil Code there is an indication that not everything that is a loan applies to loans.
Differences between a loan and a loan
One of the key differences between a loan and a loan is the legal regulation of the relationship. The loan agreement is governed by the civil code, while lending is also governed by banking law. At the same time, loans can only be issued by a financial institution (most often a bank), which has a Central Bank license for such activities. Whereas in the loan agreement the lender can be an individual or legal entity.
There is also a difference in the form of the conclusion of the contract. With a loan, it is always written, while a loan can be sealed with a verbal agreement (only for an amount of less than 10 minimum wages).
As a rule, a loan is provided free of charge, while a loan involves a certain fee for using other people's money. Its size depends on the interest rate, commissions, loan servicing fees, which are fixed in the agreement. Thus, the lender always benefits from the provision of funds for temporary possession.
Another difference between lending is that it always means the transfer of funds in any form - cash or non-cash. Even when a loan is taken for household appliances in a store, in fact, it means transferring money to the store from a bank. The subject of the loan transfer can be anything - a fur coat, an apartment, a car, etc. In case of loss of things that were received as a loan, the borrower must return similar goods with the same quality characteristics. That is why loan agreements are not concluded for unique exclusive items (for example, sculptures, paintings, etc.).
A loan can imply the transfer of a thing into ownership, while a loan always has a limited time frame and is provided for a specific time period.
