Denoting such terms as “installment plan” or “loan” you should always remember that they have different goals. What do you want to achieve with these financial investments? Again, is the game worth the candle? Of course, now we live in the Bretton Woods economic model. It is perfectly supported by the so-called “Reaganomics”, which has been working since 1981. What is it? A system of monetary relations that stimulates final consumption at the expense of loan interest. By the way, if you need a detailed consultation and risk analysis, then go to the Panorabanques website. In this article, together with the Panorabanques website, we will analyze in detail the difference between a loan and an installment plan. Let’s go!
Very often, people resort to the services of banks in the field of obtaining a loan for the purchase of real estate, home appliances and so on. There are many options for interaction between the bank and the client. But there are only two instruments in the credit segment. This is, directly, a loan of money at interest and in installments. Let’s define terms.
Credit
This is targeted financing of the bank for the purchase of a certain product at the expense of borrowed funds at a certain percentage and for a certain period. That is, the bank pays for your purchase in full, and you return the money to it, taking into account the interest rate set at the time of signing the loan agreement.
Installment Plan
This is a method of purchase in which the store provides the buyer with the opportunity to pay for the goods in equal installments. This is due to additional payments, over several months. That is, the store allows the buyer to pay off the debt in small installments to increase demand for their goods.
Therefore, the main difference between a loan and an installment plan is that only a bank can issue a loan and at the same time claim interest. And you can agree on installments in the store and do not overpay for the purchased goods. For installments and loans, you can consult the Panorabanques website.
How to distinguish a loan from an installment?
For ease of understanding the difference between installments and loans, consider the following indicators:
The absence of interest is a clear difference between an installment plan and a loan. Although there are already banks offering interest-free plans for everything, but only in affiliate networks);
Registration time – most often, installments can be issued in 15-20 minutes, and for it, you just need to have a passport with you. And in the case of a loan, it can take longer. You also have to provide countless additional documents;
The credit history for the store is not critical, or rather, they do not check it, unlike the bank. In most cases, it is a damaged credit history that causes the bank to refuse to issue a loan;
The installment plan involves initial payments in the amount of at least 30% of the value of the goods, but the bank may not require this;
The loan term, as a rule, can reach 5 years, and the store most often provides installments up to six months;
Most often, a loan is issued against a guarantee or collateral, and installments are rarely supported by something, which is a very profitable option for buyers;
If we talk about the advantages of “Reaganomics”, then the stimulation of demand is determined by the presence of many loans. The borrower repays it gradually. At the same time, he does not overpay extra interest. To take into account all the pitfalls when analyzing loan rates, contact Panorabanques.
When lending, the purchased goods immediately become the property of the client. And in installments, it is transferred to him on the terms of use. And only after the full repayment of the debt, it becomes property.
So, if you need to make a purchase of any furniture or household appliances, then installment plan is the most convenient and easiest option. If you need money directly, it is best to look for favorable loan terms. Be sure to read the terms of the agreement carefully. Especially if it’s written in small print. It is advisable, in general, not to rush and look at each offer several times.
In conclusion, I wish you good luck in the correct execution of an installment plan or a loan! And the Panorabanques website will help you with this.
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