Loan and credit – is it really the same?


The banking services market is constantly evolving, and public awareness of individual services is steadily increasing. Still, in everyday language, loan and credit are two terms used interchangeably. This is due to the fact that both the loan and credit, from the client’s point of view, allow him to obtain the necessary material support. In practice, however, the loan and credit are not the same. Let’s learn the differences between them.

Legal basis – the basis of understanding

Legal basis - the basis of understanding

To understand that loans and credits are not identical, you should first reach for legal provisions. In the case of a loan, the rules for granting it and the content of the contract are regulated by the Civil Code. The law on loans, in turn, found its provisions in the Banking Law.


Pursuant to law, a loan can only be granted by a bank , and therefore an institution which is regulated by specific regulations. It also translates into clear guidelines regarding the loan itself. It can be granted only in cash, never in kind. During its granting a loan agreement is required, which precisely specifies all the details, including:

  • Loan amount (charged by the customer).
  • Payment (commission and interest rate), which translates into the exact amount returned to the bank.
  • Duration of the loan.
  • Purpose of the loan – it is purposeful and must be used in the manner specified in the contract, and the bank has the right to control whether this condition is met.
  • Type of security.


Pursuant to the Civil Code, the loan can be granted both by an institution and a private person. The method of granting the loan is not strictly regulated by law. This translates into some arbitrary arrangements between the borrower and the lender. Due to the fact that loans are often granted as part of family relationships, the arrangements can be very liberal. In the age of cases when it is family help, it is not subject to any interest or commission.

Loans and credits also differ in terms of what benefits can be provided under them. The loan may not only concern money, but also items, for example a car. Furthermore, the funds made available can be used in any way that does not have to be determined in advance. As a result, the lender may not even know how they are being used and it is not possible to check for interference or interference.

An important feature of the loan is also that it does not have to be written off. In the case of amounts or items below USD 1000, an oral agreement of both parties is sufficient. Such liberal rules often mean that the loans are not covered by any collateral or its form is a guarantee.

Loan and credit versus work

Loan and credit versus work

Knowing that the loan and credit are not unambiguous, it is worth considering what requirements for the source of income are associated with each type of material assistance.

As you can easily imagine, with a loan it all depends on who grants it and on what terms it is based. When a loan is granted by an institution, including a parabank, the borrower will be required to source of livelihood. However, if the borrower is a relative, he may not require such security.

The loan, due to the fact that it is regulated by specific provisions, is always granted to persons who have a permanent source of income. It is necessary to present documents confirming employment in the bank. What’s more, you can apply for credit only after working for a certain period of time:

  • If you are employed under an employment contract, you can apply for a loan after only 3 months of work.
  • If you are employed under a mandate contract or a specific task contract, you can apply for a loan after 12 months. In order to obtain it, your account statement is necessary in addition to the contract. It is based on which your average income from the last 12 months is calculated.
  • As an independent entrepreneur, you must run your business for at least 12 months. Also in this case, you must provide an account statement that is the basis for calculating your income during your last year of work.

Loan and credit – summary

Loan and credit - summary

When comparing loans and credit, it’s easy to see that the second benefit seems to be harder to get. The requirements set for the borrower are higher, and the bank thoroughly analyzes and verifies the client’s revenues and charges. A loan, especially granted by a parabank, is simple and quick money that can be obtained without any collateral or long working period. Why, then, are loans less favorable and more dangerous?

Due to the lack of requirements and collateral, institutional loans are usually much higher interest rates. This is especially evident in the case of payday loans, which require repayment several times higher than the borrowed amount. They are also granted to those who are not solvent, which results in their growing debt.

Therefore, if you are thinking about various funding options, we encourage you to choose a loan that will ultimately cost you less money and nerves. However, if you do not know how to get it, please contact us.



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