What is the difference between a lender and a creditor?
Lenders are most frequently banks, credit unions, and state-licensed private lenders who will loan money to you, documented by a legally enforceable loan agreement, either by providing a check which can be cashed or deposited into your bank account or by sending the money to your bank account by way of an electronic transfer.
Creditors for the most part are retailers – furniture stores, clothing stores, gasoline companies, auto finance companies, credit card providers – and banks who will provide you the ability to finance purchases you make at a retailer through an extension of credit approved by the financial entity who provides the line of credit or the loan.
These loans may be either:
- open-ended revolving lines of credit often evidenced by a credit card, or
- a closed-ended installment loan that is usually completely paid between 24 months and 72 months depending on the amount of the financing you qualify for and which you then elect to take.