DEFINITION OF CREDIT

The etymological origin of the word credit goes back to the Latin creditum, which means “trusted thing”. Therefore, the notion of credit appears linked to trust.

A credit is an amount of money owed to an entity (for example, a bank) or to a person.

In another sense, the term credit is used as a synonym for authority, fame or reputation : “The player still has credit to reverse the situation”.

In the educational field, usually in universities, a credit is a unit of evaluation of a subject, which is equivalent to a certain number of teaching hours: “I need 40 credits to be able to take that subject”.

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Finally, the credits are the titles that mention the people who participated in the filming of a movie or in the production of a television program. They usually appear at the beginning at the end of the broadcast. The place that an artist occupies in the credits reflects the importance or fame of her; instead, those with smaller holdings may not even appear in the titles.

What are the differences between a credit and a loan?

It is very common for these two terms to be confused, especially in those areas where there is no financial culture, however, it is necessary to explain that despite the fact that many say “I have to ask for a loan” or “I am going to ask for a loan » is exactly the same, there are many differences between them, which we will explain below.

In a loan, the bank makes a fixed amount of money available to a client, which must be repaid within a certain period of time, together with previously scheduled interest. It is an operation that is carried out in the medium or long term and that is amortized in regular installments that can be monthly, quarterly, semi-annually or annually. Thus, the client can plan the form and installments in which he will return the money that was lent to him. In most cases, loans are granted to private clients for private use and, when signing the contract, certain requirements are requested, such as a guarantee or guarantee.royal. Once signed, the loan will be entered into the account that the client already has and from the first day it becomes effective, interest will begin to be calculated according to the amount that the bank has lent.

In the case of loans, the bank offers the client a credit account, in which the client can access the amount they need (there is a maximum amount determined in the contract). In general, the way in which the client pays said credit is on a regular basis when the bank sends him the settlement for the money used, to which the expenses and interest imposed by the entity are added.

In both cases, money is lent and the person agrees to repay it within a certain period of time and, also in both cases, the bank obtains its profits from the interest that it imposes on the contract.

Finally, in both the first and second cases, the creditor (who grants the credit) has the right to demand and collect the money within the stipulated time and, in the event that the person does not comply with the payment, the creditor may take legal retaliation against him (such as suing him and taking him to court).

There is a type of credit known as consumer credit and which consists of a loan offered by a financial institution to a person or company so that they can buy goods or have a certain amount of money for a certain operation.

Some of the products that can be purchased through a consumer loan are cars, furniture, household appliances, entertainment accessories, computers, ornaments and decoration products, and also intangible goods such as trips or leisure activities.

It is worth mentioning that some organizations, such as supermarkets, propose joining a consumption account, where the client obtains a credit card that will allow him to buy products from that place and pay in installments.

CREDIT