Quite commonly, the two terms are confused with two distinctly different concepts. There really is a difference between a loan and a loan and not just one.
The basic difference is that the term loan is defined by the Commercial Code – or the credit agreement, while the loan is the Civil Code – the loan agreement. Different demands are thus placed on both species.
The loan is provided by an entity that has a business license, such as a bank.
It will draw up a loan agreement with you, which you can then use under the terms of this contract. Thus, the counterparty undertakes to provide you with the appropriate amount of money in accordance with pre-agreed terms. Sometimes we also see a breakdown of bank credit and non-bank credit .
To put it simply, a loan is something like an account from which you can draw money according to pre-agreed terms. So you never have to draw any money and yet the credit agreement is closed and valid.
On the other hand, you can get a loan from anyone and the loan agreement will usually only come into effect once you have taken the money. From that point on, all charges and other possible charges are calculated. This is a significant difference between the two concepts.
Another difference is that, unlike the loan may be interest-free loan completely. So if someone gives you money and doesn’t want anything, it can never be a loan. Conversely, credit must always cost something. Furthermore, the subject of the loan must always be only money, on the contrary, you can borrow anything that the law permits – any tangible property.
On the contrary, it is common that money, whether from a loan or a loan, is completely legal and must, of course, be paid, including all interest and fees, under the applicable contract. It is important that it always includes pre-agreed terms, where the repayment period, the amount of interest and other rewards will be. Both the credit agreement and the loan agreement can be concluded between natural and legal persons. However, from the accounting point of view, they deal with them differently.