“We only live once”, they say. Because of this, many people think that we should live life to the fullest. If you have a list of the things you want to do and have, you better make things happen before it’s too late. However, nothing in this world is free. If only we had unlimited money in our bank accounts, we’ve probably ticked everything off our bucket list by now.
Buying our dream house, going on a much needed vacation trip and opening up a business seem too expensive for our own good. Although these are good investments and beneficial, sometimes we need extra help by borrowing money from a helping hand. Loans and Advances might be a good idea for what you need. But before applying for any of the two, it’s important to know what differentiates loans from advances.
- It is money lent to an individual, group, or to an organization
- Long term commitment
- A kind of debt
- Has a lot of legal issues
- To be paid back in a longer period of time
- May be secured or unsecured
- Money provided by the bank to help them fulfill short term requirements
- Short term commitment
- A credit facility
- Has less legal issues
- Requires to be paid back within a shorter period of time
- Generally secured by asset or guarantee
Both loans are to be repaid with interests and can be paid in bulk or installments. If you want a less hassle term, choose advances because it has less legal formalities you should be concerned about. If you need a longer time to pay a certain amount of money, then go for loans. Regardless of whether it is secured or not, one must always be mindful in transactions like these for there may be hidden fees, a rate that goes up and down, and confusing or unclear statements in the agreement. Loans and advances may have a similar concept in terms of being a service where you could borrow a specific amount of money, but these differences are important to know so you could determine which one is better for you.