If these two terms are wrong, you are at the right address. Let’s explain both terms and get rid of all doubts once and for all.
The lender thus incurs a receivable from the borrower and the debt to the lender. In the case of borrowing money, the amount borrowed is called the principal and the agreed interest is its accessories.
If the definition of a loan on the previous lines did not help you a lot, let’s explain everything in more detail. Since 1 January 2014, new terminology has been introduced and in some cases the term loan has been replaced by the term loan. The Code thus returned to the designation known to the previous non-socialist codes.
For example, in the case of buying a new car for which you will not have enough money, you will in principle take a loan instead of a loan. The loan can be paid (interest) or free of charge. The subject of the loan is only a substitutable item, typically money. In addition, in the case of a loan, the borrower acquires title to the substitutable thing left.
It would be a mistake to mistake, for example, “borrowing” books in the library for a loan. In this case it is not possible to speak about the conclusion of the loan contract, because in this case the contractual relationship is payable (the payment for the loan of the book is the payment for the library card) and the loan is by definition free of charge.
The main features of the rental are:
- Free use of the item
- The object is an unusable thing (a thing whose use does not consist in consuming it – for example, a hammer)
If you need to borrow a tool from a neighbor – for example, the aforementioned hammer for a definite period of time, it is about fulfilling the essence of the loan.
The adoption of these terms is useful
As each concept is governed by different rules. If we got a headache when buying a car, for example, be aware that you can continue to use the car loan terminology.
On Best Lenders Finance’s website, we have developed a glossary of basic terms to help you understand your financial terminology. The complete overview can be found here.