What is the difference between financing and personal loan?

Many people are often mistaken when it comes to financing and borrowing, in which they believe that these financial services are synonymous. However, we will explain here the differences between these services and help you choose the one that is right for you.

First, let’s understand what each service is:

Personal loan

Personal loan

It consists of a financial service requested between the client and a financial institution, which the applicant receives an amount of money granted by that company that must be returned within a specified period, paying through installments with interest.

The loan is ideal for emergencies and fast cash needs, and can be used in any way you wish, from paying debts to making a trip.

Financing

It is also a financial service with a contract between the client and the financial institution, but in this modality the amount granted has a specific destination contained in a contract, and usually the bank requires a guarantee to release the financing, such as fiduciary alienation or mortgage.

Financing is a good choice for anyone who wants to get a good, like a car or property. But you need to be willing to offer something as collateral and tackle the whole bureaucracy with various request documentation.

What are the differences between financing and personal loan?

financing and personal loan

Generally, the amount of the financing exceeds that of the loan, which directly influences the interest rates charged. In addition, the guarantee that the client offers to the bank when requesting a financing also raises the interest rates.

Funding may be a little more bureaucratic than can be achieved in comparison to the loan. Both carry out the credit analysis of the applicant to decide whether to grant the money to the client.

Which is the best choice for you?

cash

In order to choose between the two services, the following points must be taken into account:

– How much money do you need?

– How long can you pay the installments?

– Is your need short-, medium- or long-term?

When answering these questions, carefully examine the Total Effective Cost (TSC) that will be awarded, including your interest and see which is the most ideal for your case.

If you have not decided yet, do not be in doubt. Need quick cash? Count on Financial Group, we make a loan for you 100% online, fast and secure, and the best, without any bureaucracy.

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