Definitions
- Referring to a type of bond or long-term debt instrument issued by a company or government. - Talking about a financial instrument that provides a fixed rate of interest and is backed by the issuer's creditworthiness. - Describing a form of investment that involves lending money to a company or government in exchange for regular interest payments.
- Referring to a sum of money borrowed from a bank, financial institution, or individual with the expectation of repayment with interest. - Talking about a financial transaction where one party lends money to another party for a specific purpose. - Describing a form of credit that allows individuals or businesses to access funds for various purposes.
List of Similarities
- 1Both involve borrowing money.
- 2Both require repayment with interest.
- 3Both can be used for business or personal purposes.
- 4Both involve a lender and a borrower.
- 5Both are financial transactions.
What is the difference?
- 1Type of instrument: Debenture is a type of bond or long-term debt instrument, while loan is a sum of money borrowed.
- 2Issuer: Debenture is issued by a company or government, while loan is typically issued by a bank or financial institution.
- 3Interest rate: Debenture offers a fixed rate of interest, while loan may have a fixed or variable interest rate.
- 4Collateral: Debenture is backed by the issuer's creditworthiness, while loan may require collateral such as property or assets.
- 5Repayment terms: Debenture has a fixed repayment date, while loan may have a flexible repayment schedule.
Remember this!
Debenture and loan are both financial instruments that involve borrowing money and repaying it with interest. However, the difference between debenture and loan lies in their type of instrument, issuer, interest rate, collateral, and repayment terms. A debenture is a type of bond issued by a company or government that offers a fixed rate of interest and is backed by the issuer's creditworthiness. On the other hand, a loan is a sum of money borrowed from a bank or financial institution that may have a fixed or variable interest rate and require collateral.
