There is often confusion between the two terms. Here are the differences!
Loans, loans, consumer credit, are increasingly recurring terms that we hear or use, often without knowing what they are specifically.
In reality, talking about financing is like talking about fruit or cars, that is, of a generic category: just as there are various brands of cars and various types of fruit, so there are different forms of financing.
A Fiat and a Ferrari are always cars… but very different!
From the greengrocer nobody will understand if we just ask for fruit, without specifying what we want to buy in particular: oranges, apples, pears or other.
Now, applying for funding is certainly not like buying a kilo of fruit or a car, but it is an operation that needs particular attention, and let’s see why…
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For the purchase and evaluation of most consumer goods we don’t need many preliminary explanations. When we go to a dealer, this does not need to explain the difference between a small car and a sedan, because the difference is completely evident: the bodywork, the accessories, the cost, are all elements that alone are enough to make us understand that we are talking about different car categories.
Unfortunately, for financing it is not the same thing, because a financing is not an object that is seen as a car or something else, it is a service that can be presented in different forms, known specifically only by professionals. Once a good consultant has the task, once we understand our needs, to guide us in making the most appropriate and convenient choice.
Therefore, it is important to know that there are different types of financing, distinguishable mainly on the basis of the subjects to which they are addressed – PRIVATE or COMPANIES – as well as, on the basis of the amounts disbursed and the purposes for which they are requested.
This distinction allows us to talk about ” consumer credit “, more commonly called consumer credit which represents a first and important macro category, which includes all loans granted to private individuals, for an amount between $ 200.00 and $ 75,000., 00. Therefore, a loan requested by a private individual for the purchase of a television set, but not for the purchase of an agricultural machinery or other object that is used for professional needs, of any amount will be included in consumer credit.
Why this distinction???
Because the legislator thus wanted to identify a category of loans which for amounts and purposes are mainly addressed to subjects recognized as ” CONSUMERS “, a category for which it has provided for specific protections and specific rights. These protections translate into information obligations to be provided to the consumer customer by the bank or company authorized to provide the loan, before establishing the contractual relationship and then for the entire duration of the relationship that may have been established.
And the Loans, instead???
So far we have always used the term “loan” because it is a generic term, however, ” loan ” is a specific term that refers to the particular form that financing can take.
For example, in the category of consumer credit that we have named, there are loans such as the “finalized loan” – the one required for the purchase of specific goods, such as appliances or mobile phones – or the “personal loan” which instead does not provide for a specific purpose.
Therefore, financing is the term used to refer to a generic category, loan is the particular form that financing assumes, while the term consumer credit simply defines the category of financing addressed to “private” consumers, for which the law provides for particulars protections and rights.
It will always be the task of our consultant to identify in particular the loan that best suits our needs at the moment.
Therefore, it is always good to turn to a specific professional figure, an expert in financing, ensuring that he is qualified to practice the profession.