What is the difference between a consumer loan and a credit car

  • A credit card and a consumer loan are two similar financial instruments that allow you to borrow money from a bank. Credit and credit card have similarities and differences.

    In both cases, the money must be returned on time, interest must be paid for the use of bank funds. Both when issuing a loan and when issuing a card, an agreement is drawn up, for violation of which the bank will charge fines. But in terms of the form, terms and schedule of debt repayment, a loan and a credit card differ from each other.

    Lending form
    A consumer loan is a standard bank loan that is issued for a specific purpose or for specific needs of the borrower. Depending on this, the loan is called targeted or consumer. After signing the consumer loan agreement, the client receives money in cash at the bank's cash desk, on a card or account and can spend it at his own discretion. If the loan is targeted - for the purchase of a car, for example, then the money can be immediately transferred to a specific seller. This is how purchases of cars on credit in a car dealership are made out.

    Consumer loans are often issued in full at once and issued for a strictly specified period.

    A credit card is a payment instrument for a credit account opened with a bank. The purposes of spending borrowed funds are not limited, the card can be used to pay for goods, services, tickets, online purchases. When issuing, there is money on the card - a renewable limit set by the bank. When the holder spends funds from the card - pays for purchases, withdraws or transfers money, the available balance decreases. To renew the limit, it is necessary to fully or partially repay the debt to the bank - monthly regular payments, partially or completely at the discretion of the holder.

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