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What is the difference between Loan and Advance?
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Answer / lxmi1972
Loan- Is an amount given for a specified period and is
recoverable with a particular interest rate.
Advance- means it is given for a temporary basis to meet out
cause (say)purchases, Travel expenses etc., Interest is not
charged on this advance amount.
Both are Balance sheet items.
| Is This Answer Correct ? | 204 Yes | 76 No |
Answer / h.r. sreepada bhagi
Loan refers to money lent to a borrower for Short-Term,
Long-Term or for unspecified period (Working Capital
facility which is renewed every year). Loan carries a
specific rate of interest as agreed between the lender & the
borrower and the terms of the agreement. A loan may be for
general purpose (Say working capital) or specific purpose
(Equipment loan, Export Packing Credit, etc.)
On the other hand Advance refers to money paid in advance to
any one to meet a specific future expense, liability or to
tide over some specific requirements. Advances paid by an
employer to employee may be to meet certain expenses like
official travel, or to meed some personal needs in the form
of salary advance. Advance paid to meet official expenses
will be settled once it's expended for the said purpose,
salary advance may be recovered by deduction form monthly
salary as per the policy of the company.
Again advance may be paid to discharge a future liability.
For example :Income Tax paid in Advance. Again advance may
carry interest - The company may charge nominal interest on
the advance paid to it's employees. In case of Income Tax
advances, the Government will written the advance in excess
of actual tax liability with interest to the asessee who has
paid advance tax.
Again there may be payment of money in advance by a buyer to
a supplier of goods & there may be a clause in the purchase
order that, the supplier will be liable to pay interest at a
specified rate in the event of delay in supply as per the
terms of Purchase Order accepted by them.
One major difference between the two is :Loan is always
under a contractual arrangement between the lender and the
borrower & it carries interest, but generally advance is
made with out agreement and may not carry interest in all cases.
| Is This Answer Correct ? | 100 Yes | 19 No |
Answer / devaraj
LOAN :The loan can be given to any one with proper
approval with a nomial interest rate and it is receovered
in easy instalments it is liability in balance sheet
Advances: Advance is given to a known interal person of a
company to meet his offical expenses incurred by him,
ex.travel expenses,purchase of stationery, etc.it is
liability in balance sheet
| Is This Answer Correct ? | 61 Yes | 30 No |
Answer / shailendra
loan always comes with the interest but advance always
been without interest.
for ex- v provide loan for a particular period against
security but advance always given to a known or any
official for a particular work without any specific period.
| Is This Answer Correct ? | 25 Yes | 12 No |
Answer / k. sailendranath
LOAN OR ADVANCE- BOTH ARE TREATED AS A CREDIT FACILITY. BUT IF THE CREDIT FACILITY IS REPAYABLE IN A SHORT PERIOD SAY WITHIN ONE YEAR IT IS TREATED AS "ADVANCE" AND IF THE CREDIT FACILITY IS REPAYABLE MORE THAN A YEAR IT IS TERMED AS "LOAN"
| Is This Answer Correct ? | 25 Yes | 14 No |
Answer / ali hassan. k
Advances is a short term period with in one year, but Loan is long term period with in more than one years.
| Is This Answer Correct ? | 18 Yes | 9 No |
Answer / avnindra singh
loan:
in this case of loan, the banker advance a lump sum for a certain period at an agreed rate of interest .
| Is This Answer Correct ? | 11 Yes | 3 No |
Answer / mohammad hamid
A loan is granted for a specific time period,granted against security of certain asset.
Whereas
Advances means credit facility provided by the bank to its customer differ from loan in the sense that loan may be granted for longer period and cash credit for short period.
In advances interest is charged only on withdrawn amount and not on given amount.
| Is This Answer Correct ? | 9 Yes | 3 No |
Answer / d.srinivas
Advance:it is understanding between two persons.on this no interest charge will be there. This can be granted for industries for their short term needs.
Loan:It is given to the needy persons,who will pay with the interest.it is a long term borrowing thing.
| Is This Answer Correct ? | 4 Yes | 1 No |
Answer / rahi
A Loan and Advance may be defined as money lent at interest or on profit. It is nothing but temporary parting with one's [an individual or an institution] resources in order to augment the purchasing power of the receiver of such facility with a promise to return the same with interest profit or otherwise as mutually agreed upon.
| Is This Answer Correct ? | 1 Yes | 0 No |
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