What is the difference between a loan and a credit facility?
When deciding on what type of money to borrow, you should understand the key similarities and differences between a loan and a credit facility. The application process is very different, but it is good to have all of the paperwork necessary to complete the applications as well as a high enough credit score as outlined in the qualifications and requirements.
The thing about loans is they are more concrete. When you agree to take out a loan, this loan is a specific borrowed amount you have to pay by the end of your agreement. There is a minimum repayment value calculated from the moment you sign the contract. Examples of common loans in Australia are car loans, home loans, and personal loans.
Credit facilities, on the other hand, are approved borrowed amounts that you don’t have to pay unless you use them. There is a higher interest rate, though, when using a credit facility, but the process is quicker and easier than a loan. Common examples of credit facilities are credit cards through a bank or a merchant. The only amount you pay back is the amount left on your balance. The approved borrowing amount is the maximum you can use.
Loan vs. Credit Facility Conclusion
Here at Mortgage House, we offer our consumers and applicants various types of loans and credit facilities that fit all of your needs. Loans are more permanent and the application process does take time. Call our Mortgage House expert lenders soon so they can help you through the process with a smile on their faces!