What is the difference between credit and loan?

There are three differences between credit and loans:

1. The essential differences between the two:

1. The essence of credit: Simply put, credit refers to Banks provide financial support directly to customers, or guarantee the credit of customers in relevant economic activities to third parties.

2. The essence of loan: refers to a form of credit activity in which banks or other financial institutions lend monetary funds according to certain interest rates and must be returned. Banks invest their concentrated currency and monetary funds through loans, which can meet the society's need for supplementary funds to expand reproduction and promote economic development. At the same time, banks can also obtain loan interest income and increase their own accumulation.

2. The principles of the two are different:

1. The principles of credit granting:

(1) It should be based on the economic development level, economic and financial conditions of different regions. Differential credit granting will be implemented based on factors such as management capabilities, credit fund occupation and use, financial risk status and other factors.

(2) Different credit lines should be determined based on factors such as the business management level, asset-liability ratio, and loan repayment ability of different customers.

(3) Credit lines for various regions and customers should be adjusted in a timely manner based on the financial risks in each region and changes in customer credit.

(4) Within the determined credit limit, the amount and actual loan amount of each loan should be specifically determined based on the actual local and customer financial needs, repayment ability, credit policy and the bank's ability to provide loans. lump sum. The credit limit is not the planned loan limit, nor the allocated loan size, but the internal control loan limit implemented by commercial banks to control regional and customer risks.

2. Loan principles:

(1) Loan safety is the primary issue faced by commercial banks.

(2) Liquidity refers to the ability to recover loans within a predetermined period or to realize cash quickly without loss, so as to meet the needs of customers to withdraw deposits at any time.

(3) Efficiency is the basis for the sustainable operation of banks.

3. The two methods are different:

1. Credit granting method: Commercial bank credit is divided into two methods: basic credit granting and special credit granting.

2. Loan methods: Loans in a broad sense refer to methods of lending funds such as loans, discounts, and overdrafts.