What is the difference between a loan and a facility?
While there is a striking similarity between loans and a facility, key differences are important to consider before applying for either. For example, a facility is a line of credit revolving and constantly updating and changing. You do not need to use the entire line of credit, and the credit stays open until you close it out. In other words, a facility is a credit card that you may make repayments on depending on the used amount of credit.
A loan is one amount that is borrowed from a lender or a banking institute. This is different because these are key numbers borrowed. When the amounts are borrowed for either a mortgage, personal loan, or car loan, you enter an agreement to pay the total borrowed amount, plus interest, by a specific date. To repay the borrowed amount, monthly or fortnightly repayments are scheduled.
Here at Mortgage House, we mainly offer loans. The loans, though, are competitive and personalised. We know everyone has their wants in a loan, and we offer different styles with low costs for all borrowers.
Loan Vs. Facility Conclusion
When looking at the differences between a loan and a facility, they are striking! For example, borrowers are still borrowing money at a large interest rate. However, loans have a lower interest rate compared to a facility since these facilities have higher risks and more to lose. Loans are offered at low-interest rates to attract interested borrowers.