Difference
between Running Finance and Loan
Running Finance is kind of
financing where interest is charged on the spent amount, while in case of loan
the interest is charged on whole amount, irrespective of its usage. Running
finance facility is suitable for trading business where the income from the
business can be deposited; in case of fixed asset purchase long term is more
suitable product due to lower rate.
1.
Rate of interest
Running Finance is expensive product than loan due to
its flexibility of repayment.
2. Flexibility in repayment
Running finance offer
higher flexibility both in timing and amount of repayment, where in case of
long term liability a fixed amount within due time is required to be repaid. In
running finance the amount spent can be repaid any time, while in case of loan
a regular installment is required to be repaid.
