Loan vs. Limit — What's the Difference?
By Tayyaba Rehman — Published on October 27, 2023
A "Loan" is a sum of money lent to a person or entity with the expectation of repayment, whereas a "Limit" denotes the maximum extent or amount allowed for something.
Difference Between Loan and Limit
Table of Contents
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Key Differences
"Loan" and "Limit" are terms that often interplay in financial contexts but have distinct meanings. A "Loan" refers to an amount of money or assets given to a borrower with the expectation of returning it, usually with added interest. For instance, many students take out loans to finance their education, intending to repay the amount after they begin working.
On the other hand, "Limit" refers to the maximum boundary, extent, or amount of something permitted. In a banking context, a credit limit might be assigned to credit card users, defining the maximum they can spend using the card. Here, while the "Loan" indicates the actual money lent out, the "Limit" determines the maximum amount one might be lent.
Understanding the difference between "Loan" and "Limit" is crucial in financial contexts. For instance, a bank might approve a loan based on an individual's creditworthiness. Yet, there might be a limit set on the loan amount, ensuring the borrower doesn't exceed a certain sum.
In daily life too, while a "Loan" represents borrowed assets, a "Limit" often acts as a boundary or constraint, ensuring moderation or adherence to rules. In essence, while both terms can overlap in contexts like banking, their core definitions set them apart – "Loan" is about borrowing, and "Limit" is about boundaries.
Comparison Chart
Definition
Amount of money lent for repayment
Maximum extent or amount allowed
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Function
Provides temporary financial assistance
Acts as a boundary or constraint
Context
Financial, lending
Many contexts, including financial
Association
Borrower, lender, interest
Boundary, cap, threshold
Example
Mortgage loan, personal loan
Speed limit, credit limit
Compare with Definitions
Loan
An agreement to lend something to someone.
She offered a loan of her books to her friend.
Limit
A point beyond which something does not or may not extend.
This city is the limit of our travel plans.
Loan
An act of lending something, typically money.
The bank approved her loan application.
Limit
A restriction on the range or scope of something.
There's a limit to how much I can help.
Loan
A borrowed sum of money expected to be paid back.
He secured a loan to buy his first house.
Limit
The point, edge, or line beyond which something ends, may not go, or is not allowed
The 12-mile fishing limit.
The limit of my patience.
Loan
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.
Limit
Limits The boundary surrounding a specific area; bounds
Within the city limits.
Loan
An instance of lending
A bank that makes loans to small businesses.
Limit
Something that restricts or restrains; a restraint
The child needs to have limits put on his behavior.
Loan
A sum of money that is lent, usually with an interest fee
Took out a loan to buy a car.
Repaid the loan over five years.
Limit
The greatest or least amount, number, or extent allowed or possible
A withdrawal limit of $200.
No minimum age limit.
Loan
The agreement or contract specifying the terms and conditions of the repayment of such a sum.
Limit
(Games) The largest amount which may be bet at one time in games of chance.
Loan
The repayment obligation associated with such an agreement
She couldn't afford the loan after losing her job.
Limit
A number or point L that is approached by a function f(x) as x approaches a if, for every positive number ε, there exists a number δ such that |f(x)-L| < ε if |x-a| < δ.
Loan
The right to payment associated with such an agreement
A bank that buys consumer loans.
Limit
A number or point L that is approached by a sequence bn if, for every positive number ε, there exists a number N such that |bn-L| < ε if n > N. Also called limit point.
Loan
The state of being lent for temporary use
A painting on loan from another museum.
Limit
(Informal) One that is intolerable, remarkable, or extreme in some other way
"That's the limit!" the babysitter exclaimed after the child spilled a glass of milk.
Loan
To lend (money or property).
Limit
To confine or restrict with a limit
Let's limit the discussion to what is doable. The offer limits us to three for a dollar.
Loan
An act or instance of lending, an act or instance of granting something for temporary use.
Because of the loan that John made to me, I was able to pay my tuition for the upcoming semester.
Limit
A restriction; a bound beyond which one may not go.
There are several existing limits to executive power.
Two drinks is my limit tonight.
Loan
A sum of money or other property that a natural or legal person borrows from another with the condition that it be returned or repaid over time or at a later date (sometimes with interest).
All loans from the library, whether books or audio material, must be returned within two weeks.
He got a loan of five thousand pounds.
Limit
(mathematics) A value to which a sequence converges. Equivalently, the common value of the upper limit and the lower limit of a sequence: if the upper and lower limits are different, then the sequence has no limit (i.e., does not converge).
The sequence of reciprocals has zero as its limit.
Loan
The contract and array of legal or ethical obligations surrounding a loan.
He made a payment on his loan.
Limit
(mathematics) Any of several abstractions of this concept of limit.
Category theory defines a very general concept of limit.
Loan
The permission to borrow any item.
Thank you for the loan of your lawn mower.
Limit
(category theory) The cone of a diagram through which any other cone of that same diagram can factor uniquely.
Loan
(Scotland) A lonnen.
Limit
(poker) Fixed limit.
Loan
To lend (something) to (someone).
Limit
The final, utmost, or furthest point; the border or edge.
The limit of a walk, of a town, or of a country
Loan
A loanin.
Limit
(obsolete) The space or thing defined by limits.
Loan
The act of lending; a lending; permission to use; as, the loan of a book, money, services.
Limit
(obsolete) That which terminates a period of time; hence, the period itself; the full time or extent.
Loan
That which one lends or borrows, especially a sum of money lent at interest; as, he repaid the loan.
Limit
(obsolete) A restriction; a check or curb; a hindrance.
Loan
To lend; - sometimes with out.
By way of location or loaning them out.
Limit
A determining feature; a distinguishing characteristic.
Loan
The temporary provision of money (usually at interest)
Limit
(cycling) The first group of riders to depart in a handicap race.
Loan
A word borrowed from another language; e.g. `blitz' is a German word borrowed into modern English
Limit
A person who is exasperating, intolerable, astounding, etc.
Loan
Give temporarily; let have for a limited time;
I will lend you my car
Loan me some money
Limit
(poker) Being a fixed limit game.
Loan
Money lent at interest.
The loan accrued a 5% interest rate annually.
Limit
(transitive) To restrict; not to allow to go beyond a certain bound, to set boundaries.
We need to limit the power of the executive.
I'm limiting myself to two drinks tonight.
Loan
A thing that is borrowed, especially a sum of money.
The car was purchased with a loan.
Limit
To have a limit in a particular set.
The sequence limits on the point a.
Limit
(obsolete) To beg, or to exercise functions, within a certain limited region.
A limiting friar
Limit
That which terminates, circumscribes, restrains, or confines; the bound, border, or edge; the utmost extent; as, the limit of a walk, of a town, of a country; the limits of human knowledge or endeavor.
As eager of the chase, the maidBeyond the forest's verdant limits strayed.
Limit
The space or thing defined by limits.
The archdeacon hath divided itInto three limits very equally.
Limit
That which terminates a period of time; hence, the period itself; the full time or extent.
The dateless limit of thy dear exile.
The limit of your lives is out.
Limit
A restriction; a check; a curb; a hindrance.
I prithee, give no limits to my tongue.
Limit
A determining feature; a distinguishing characteristic; a differentia.
Limit
A determinate quantity, to which a variable one continually approaches, and may differ from it by less than any given difference, but to which, under the law of variation, the variable can never become exactly equivalent.
Limit
To apply a limit to, or set a limit for; to terminate, circumscribe, or restrict, by a limit or limits; as, to limit the acreage of a crop; to limit the issue of paper money; to limit one's ambitions or aspirations; to limit the meaning of a word.
Limit
To beg, or to exercise functions, within a certain limited region; as, a limiting friar.
Limit
The greatest possible degree of something;
What he did was beyond the bounds of acceptable behavior
To the limit of his ability
Limit
Final or latest limiting point
Limit
The boundary of a specific area
Limit
As far as something can go
Limit
The mathematical value toward which a function goes as the independent variable approaches infinity
Limit
The greatest amount of something that is possible or allowed;
There are limits on the amount you can bet
It is growing rapidly with no limitation in sight
Limit
Place limits on (extent or access);
Restrict the use of this parking lot
Limit the time you can spend with your friends
Limit
Restrict or confine,
I limit you to two visits to the pub a day
Limit
Decide upon or fix definitely;
Fix the variables
Specify the parameters
Limit
The furthest extent or boundary of something.
We reached the limit of our patience.
Limit
A restriction on the size or amount of something permissible.
There's a weight limit on this elevator.
Limit
The maximum amount of something that's allowed.
I have reached my credit card limit.
Common Curiosities
Can a loan have a limit?
Yes, banks or lenders can set a maximum limit on the amount of money they loan to borrowers.
Is a credit card's spending cap considered a loan or limit?
It's considered a limit, known as a credit limit.
What is a loan typically used for?
A loan is typically used to borrow money, which is expected to be repaid with interest.
Is the borrowed amount and the loan amount always the same?
Yes, the borrowed amount is the loan amount, but over time interest may add to the repayment total.
What does a limit denote?
A limit denotes the maximum extent, value, or amount permitted for something.
What happens if a loan is not repaid?
Defaulting on a loan can lead to penalties, increased interest, or legal actions.
Can you have multiple loans from different sources?
Yes, individuals can have multiple loans from different lenders or institutions.
What entities typically provide loans?
Banks, credit unions, and other financial institutions typically provide loans.
What determines the interest rate on a loan?
Various factors including creditworthiness, loan type, and market conditions determine the interest rate.
Why might limits be imposed in various scenarios?
Limits are imposed to ensure safety, manage risk, or maintain order and control.
What is an example of a limit in a financial context?
A withdrawal limit from an ATM is an example of a financial limit.
Can you provide an example of a limit in everyday life?
Yes, a speed limit on a road dictates the maximum speed vehicles should travel.
What's the purpose of setting a limit in banking?
Limits in banking ensure customers don't exceed their financial capacity and manage risk for banks.
Is a limit always restrictive in nature?
Yes, a limit typically acts as a boundary or restriction on actions or quantities.
Are there different types of loans?
Yes, there are various types of loans such as personal, mortgage, auto, and student loans, among others.
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Written by
Tayyaba RehmanTayyaba Rehman is a distinguished writer, currently serving as a primary contributor to askdifference.com. As a researcher in semantics and etymology, Tayyaba's passion for the complexity of languages and their distinctions has found a perfect home on the platform. Tayyaba delves into the intricacies of language, distinguishing between commonly confused words and phrases, thereby providing clarity for readers worldwide.
