What is the difference between a loan and credit?

For a loan, a lender gives a borrower a set amount of money, and the borrower pays it back over time or all at once, plus interest. Credit refers to an amount of a lender’s money that a lender lets a client spend — say, with a credit card — with the understanding that the client will pay it back on time. If the client doesn’t, they’ll be charged interest. A “line of credit” is a loan that can be borrowed and paid off repeatedly without applying for a new loan each time. A credit card works similarly to a line of credit.

Is financing a car the same as a loan?

Financing a car refers to securing an auto loan, which you pay back over a period of time. Financing is can be completed by the auto brand you are purchasing your car from, by an auto finance company or even a bank that offers auto loans. You can also get a personal loan from a bank or other lender that’s different from the place you’re buying your car. Then you can use that amount to pay for the car, and pay the lender back in instalments.

Jack Hauen – PiggyBank

Jack Hauen is a freelance writer and journalist. He has talked to full-time dungeon masters about how they made D&D their full time job, and explained the "crushing sadness" of the downtown Toronto renting experience. His reporting has appeared in Canada's top publications, including the Globe and Mail, Toronto Star and National Post.

If you meet him at a party he might try to explain the ins and outs of credit card churning but will not be offended if you slowly back away. When he's not lurking r/PersonalFinanceCanada, he can often be found in the Algonquin backcountry, already gassed after the first portage of the day.