What is the difference between loan and financing?

Whether paying for more expensive health care, organizing a financial life, or even buying a home, most people, at least once in their lives, will need to look for a financial one. Lending money is a way to make dreams come true. Although these transactions are very frequent, there are people who confuse finance with loan .

Although in both cases you are lending money from a bank, they are two very different ways of doing business. Therefore, before lending money or financing something, one must know each one well. Only then will you know what is best for you.

Prepared? Then find out the difference between loan and financing !

Find out what a loan is

Find out what a loan is

When you are looking for a company to borrow , you will receive the desired and agreed amount and can use it for any purpose. You can, for example, borrow $ 4,000 and, with it, travel, pay late bills, and have your child’s birthday party. Does not matter.

You use the money without justifying it. The only thing the bank wants is for you to pay the installments on time. These will include the amount borrowed and the interest, which was agreed upon when the contract was signed.

Interest rates vary widely, depending on where you apply for the loan. Therefore, it is interesting to research various financials, platforms or banks before deciding which one is best.

Find out what a loan is


In general, the interest on the loan is lower than the interest on the loan . However, this is a more bureaucratic way to achieve the desired value.

The delay in getting the money ready for use when the person makes a loan is longer. In addition to credit analysis, which is done on lending and financing , one’s use of money is also carefully evaluated.

For example, if you are going to finance a home, in addition to making an assessment of your financial conditions to repay it, the institutions will survey the property. The documentation should be impeccable as well as the property should be adequate and ready for use.

The interest is lower, the bureaucracy is higher and you can only use the funded amount to purchase the agreed good. Thus, it is indicated to buy:

  • The house itself;
  • A car;
  • A motorcycle, among others.