In a sale, the relationship is between the buyer and the seller and this ends upon payment of the purchase price and delivery of the thing sold, unless warranties have been breached. In a loan agreement, the relationship is between the debtor and the creditor and this ends upon full payment of the amount loaned and the interest agreed upon in writing or imposed by law.

It must be pointed out, at this juncture, that loan has two kinds: mutuum and commodatum. Simple loan (mutuum) is where one borrows money or any consumable thing. In commodatum, the main purpose of the loan is not consumption.

Both in sale and in loan, ownership over the thing sold or loaned is transferred. However, in sale, there is no obligation to return while there is an obligation to return the same kind and quality in mutuum or the same thing in commodatum.

Paras (2008) said:
In a loan, the amount is substantially smaller than the value of the security given. (Facundo, et al., CA-GR 833-R, Nov. 13, 1947). If a person, however, borrows a sum of money, and with it purchases in his own name a car, said purchaser would really be considered the buyer, and not the person who lent the money to him. (Collector of Int. Rev. v. Favis, L-11651, May 30, 1960).