Creditor is a person, an organization or any legal entity that has lend money, goods or even services to a person who required it, without getting the full value of the goods or services delivered by him. The other transacting party of the creditor is called a debtor. So, when there’s a creditor, there has to be a debtor.
Role Play
It is the role that one plays in a transaction that determines whether he is a debtor or a creditor. For example, when a person opens a fixed deposit account in a Bank, he is the creditor and Bank is the debtor, But when that very person opts for a Home Loan from the same Bank, his availing home loan makes him a debtor in this transaction, while the Bank is the Creditor.
Difference between Creditor and Investor ?
Who is a Investor?
An investor contributes to the equity or capital of a company and he shares the profit and loss on the investment based on the performance of the company, the loss is however limited by the amount that he has invested.
Who is a Creditor?
A creditor on the other hand charges interest for parting with his funds and the interest has nothing to do with the performance of the company and needs to be paid even if it is in loss.
