Often, in the loan sector, there may be an amalgam of terms that confuse the end customer. It does not hurt to have a minimum financial culture and to be able to distinguish such important concepts as borrowers and lenders, how are they different? We tell you!
Both are the two most important agents that act when establishing a contractual relationship through which a person, whether physical or legal, is requesting a financial loan for a certain amount of money. Or what is the same, without lender there is no money to lend, and without borrower that process called loan is not closed.
What is a lender?
In general, a lender is the person who gives money on a loan . And the loan is the contract that is established between him and the borrower with a series of conditions where the second agrees to return the money to the first. The lender will charge an interest along with the return of said money within a certain period.
It is important to emphasize that to be considered someone a lender – this person understanding a natural or legal person – must charge interest for this operation . Otherwise, if someone gives or gives money to someone and does not charge interest, they cannot be considered a lender.
There are three types of loans: individual loans, non-bank loans and bank loans. Bank loans, as the name implies, are those provided by financial institutions where their services and products have such loans.
On the other hand, there are non-bank lenders, an alternative to traditional banks and that are increasingly being imposed more regularly. They are made by private individuals and lend their money through participatory financing platforms such as crowdlending. A competition to banks and whose funds come entirely from private investors.
And finally, we find individual lenders. They request a guarantee to guarantee the repayment of the loan. Offering money to both companies and individuals. There are also commercial lenders and non-commercial lenders, although less common.
The former dedicate their commercial activity to the granting of loans, obtaining benefits for the commissions charged for these services. While non-commercial lenders do not engage in this activity as the main one, but it is a secondary nonprofit activity without the intervention of a financial entity, whether banking or not.
What is a borrower?
The borrower is the person who takes that money borrowed in this operation called “loan.” The borrower signs a contract whereby he undertakes to return the money to the lender paying certain interest along with the return of the borrowed money.
Whichever lender has lent you that particular amount, the borrower will always be backed by laws and regulations, although of course you must also follow a series of obligations. All this must be included in the aforementioned commercial contract where the agreement between both parties is initialed.
In this contract, certain information must always be clearly and perfectly identifiable with the conditions related to the borrower’s rights. Among them the possibility of canceling it in less than 14 days or early repayment.
The borrower will always have the right to receive the contract documentation, proof of payment, settlement documents, the right to consult the CIRBE and check the outstanding debts and, of course, have the requested credit within a certain period.
But of course, the borrower also has a series of obligations such as paying the interest on the loan without delay, returning the capital that has been lent to him in the installments and determined terms , using it for the cause for which it was granted and informing who grants him the loan of his economic circumstances so that it analyzes the risk and solvency of the operation.
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