LOANS & ADVANCES,DIFFERENCE between LOANS & ADVANCES

LOANS meaning ADVANCES meaning ,DIFFERENCE between LOANS & ADVANCES

1. Loans and advances

2. Loan meaning A loan is a type of credit vehicle in which a sum of money is lent to another party in exchange for future repayment of the value or principal amount.  In many cases, the lender also adds interest or finance charges to the principal value, which the borrower must repay in addition to the principal balance  . Loans may be for a specific, one-time amount, or they may be available as an open-ended line of credit up to a specified limit.  Loans come in many different forms including secured, unsecured, commercial, and personal loans  .

3. advances In banking, advances refer to the funds provided by the banks to the businesses to fulfill working capital requirements which are to be payable within one year  .  Advances are a type of credit facility that should be repaid within one year as per the terms, conditions, and norms issued by the Reserve Bank of India for lending and also by the schemes of the concerned bank  .

4. Loans vs advances Basis for Comparison Loans Advances Meaning Funds borrowed by an entity from another entity, repayable after a specific period carrying interest rate. Funds provided by the bank to entities for fulfilling their short-term requirements. Term Long-term Short-term Legal formalities More Less Security May or may not be secured Primary security, collateral security, and guarantees Repayment Fixed repayment schedule Flexible repayment terms Interest rates Higher Lower Presentation title 4 Table

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