February 16, 2020 / by admin / Uncategorized / No Comments

What is the difference between a loan and a loan?

The main difference between credit and loan is that credit is an umbrella term for money bonds. They are used to raise debt. Loan contracts, on the other hand, is a sub-form of loans.

A loan is usually a money loan with a higher amount and a longer-term. The situation is very different from current account credits. They are often only short-term and are taken into bank accounts almost every day. The term is therefore crucial for a loan or loan.

A distinction is made between long, medium and short-term loans. A short-term loan must be repaid within one year. The repayment of a medium-term loan between one and four years and long-term loans can have a repayment period of more than four years.

What is a loan?

money

Loans involve lending money. For this purpose, certain conditions are agreed between the lender and the borrower. Typically, two parties are involved in a loan. This is the creditor and debtor.

The creditor lends the money. In many cases, this is a bank. The counterparty is the debtor who borrows the money. The debtor is a company, a bank or a private individual.

With a loan agreement, not only the amount of the loan is determined, but also the amount of the monthly installments and the term. Creditors do not lend money without their own benefit. Since it is usually a profit-oriented company, interest is charged to the debtor.

The amount of interest depends on the creditworthiness of the debtor and the term of the loan. Interest is not, however, mandatory. In addition, processing fees apply to many banks. However, loans are possible through a kind of in-kind contribution.

This means that a loan is also possible by providing reasonable things. The most important characteristic of a loan is that the debtor does not have to return the payment immediately, but is only due within a specified period. When making use of the debtor undertakes to transfer them back or repay them including interest.

Checklist of advantages and disadvantages of a loan

cash

Benefits

  • Borrowers are liquid in the short term
  • The financial feasibility of important purchase projects is guaranteed
  • Claims for discounts and rebates can be made in cash
  • Loans can be used to replace expensive overdraft loans or expensive loan contracts (debt rescheduling)
  • Improvement of equity
  • Monthly burdens can be reduced by the new financing

Disadvantage

  • Monthly repayment rate must be applied to monthly expenses
  • Commitment to a permanent financial partner
  • Risk of over-indebtedness
  • Often the value of the object of purchase is lower after the loan has been paid off
  • Wrong assessment of the current, own financial situation
  • Risk of debt trap if monthly income ceases

Law of obligations

money

In the case of a loan agreement, the legal basis in Austria was regulated. It is a contract that is concluded between the borrower and the lender in the sense of the law of obligations. The lender gives the borrower a thing or money for a limited period of time. All obligations of both parties are regulated by law in Austria.

Through the contract, the lender undertakes to pay the agreed amount in full to the borrower. For this, he receives interest from the borrower. This is not mandatory in Austria.

Austrian law stipulates that a loan agreement is a consensual agreement. The contracts are divided into repayment loans, annuity loans, and maturity loans. Installment loans are also known as repayment loans in Austria.

With this type of loan, a fixed, constant amount over the agreed term is repaid to the lender by the borrower. In addition, interest is charged, which mostly becomes lower at the end of the term due to the fact that the remaining debt is getting smaller.

A due loan is a fixed loan or a maturity type. With this loan variant, the entire term remains the same over the amount of interest. The repayment is made in one sum at the end of the term. For this reason, the repayment type is known as the final loan type.

Checklist of advantages and disadvantages of a loan

Benefits

  • Low monthly charge on maturity loans
  • Only the interest has to be paid back
  • With real estate financing, the loan is equivalent to a profit
  • With forward loans, today’s interest is due later
  • Planning security over many years

Disadvantage

  • Conditions are not always an acute help when the loan contract is too expensive
  • Often there are additional costs that have to be considered
  • Banks do not always offer a suitable loan contract
  • Maturity loans are only possible if a fixed savings balance is available as a repayment replacement

Who is a loan suitable for?

Who is a loan suitable for?

Fast loans are well suited for all people in Austria who need fast money. Unlike an annuity loan, a long-term credit check process is not necessary, including a credit check.

Therefore, a quick loan can be approved and paid out pretty soon. With some providers, the desired loan amount is in their own bank account within a few hours.

An installment loan can also be very useful for many people. With an installment loan, a creditworthiness check is usually necessary before the contract is signed. Such a credit line is freely available after the payment. The removable residual debt minimizes the interest burden.

Who is a loan suitable for?

Who is a loan suitable for?

Employee or civil servant loans are only available to a specific group. The latter can only be obtained if the borrower works in the public service. A borrower should find out in advance about the payment of the money until the loan is repaid or repaid in full.

For self-employed people, doctors or lawyers in Austria, variable loan types are best suited. Home savings loans, on the other hand, are the best choice for singles, academics, families, and buyers up to 45 years of age. Annuity loans or forward loans are perfect for young families up to the age of 45 who have no equity capital or only have a low income.

Conclusion for loans and loans in Austria

Flexible repayments, terms or the requirements for the approval of funds are important criteria that play a major role in a loan or credit agreement.

Many loans or loan contracts can now be selected flexibly. This is mainly because the Austrian market is so big. Thus, borrowers can choose exactly the loan or loan variants such as annuity loan, installment loan, quick loan, overdraft loan or forward loan contracts that are best suited to their own needs.

The purpose of use and your own financial position play a major role here.

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