The word loan refers to the transaction by which a natural person (individual) or legal entity (company or association) asks a lender to make available to him a certain amount of money under certain conditions specified in the contract.
Note that the body that lends the money may be a bank , a credit institution , a business or even an individual.
Good to know : the regulations do not provide any special protection when the transaction occurs between individuals. It is strongly advised to declare the loan to the tax services to give it a certain date and facilitate a possible procedure.
A bit of history
A little etymology to help us in our definition. Borrowing of course comes from the word borrowing that seems to find its origins in popular Latin: ” impromutuare “. This word is a deviation from classical Latin.
In the common language, we use the words credit and loan to designate the same operation. These words are defined in the same way as borrowing and are also those terms that are most used by banks.
The different types of bank loans
There are two major borrowing families, each of which has its own set of rules.
Real estate loans
Real estate loans whose object is the purchase of real estate, whether for the principal residence, the second home or the rental investment. They depend on SCRIVENNER law I and II.
The definition of a mortgage would be the provision of a sum to acquire real estate.
Borrowing in fine
The best way to define a loan in fine or at least the clear explanation that can be given relates to the term: “IN FINE” which in Latin means in the end.
Thus a credit in fine refers to a home loan whose repayment of borrowed capital is made at the scheduled term. There is therefore no depreciation. The borrower will only pay the interest during the period.
What is the interest of a loan in fine?
The advantage of a loan in fine is primarily tax. Interests are regular and more important. In the case of an investment in a rental residence, the investor will deduct more interest and will benefit from a lighter monthly payment.
Consumer loans can be either earmarked – that is, the destination of the funds – or unallocated – which allows the borrower to take credit without having to provide proof.
Among these loans, the permanent or renewable credit is a form of borrowing quite disparaged by consumer associations because particularly dangerous, especially for households most vulnerable to the economic situation.
The definition of a professional loan is, after all, similar to the previous definitions. Only the object differs significantly, the latter depending on the needs of the company. It can thus be used to buy property bought by the company, to meet cash needs or to finance capital goods.