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The main diffrence between Loan and Advance : the interest
component.
2. Both Loan and Advance are to be repaid in installments
for example: monthly installments of equal amounts.
3. In case of Loan, interest is calculated ( Simple or
Compound type interest) and the interest amount is recovered
at the end.
4. Example for Advance: Mr. X working in an organisation. He
took 10,000 as advance to be repaid in 10 monthly
installments. Monthly recovery from salary is 1,000 . After
10 months, hi repays entire amount .
5. Example for Loan: Mr. Y took a Loan of 10,000 with a a
simple interest rate of of 12% per year. Monthly installment
is 1,000. Accrued Interest is calculated every month on
balance principal amount. The recovery chart is as below.
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