Finances are the major concern in everyone’s life. Having cash on your hands to pay for everything you want is crucial to lead a financially stable and happy life. Nowadays, many borrowing options are out there that you can choose according to your specific needs. However, credit card and personal loans are the most preferred options out there. Since both personal loans and credit cards are conveniently available, people choose to go with personal loans always. Wondering why? Before you move ahead, understand the basic difference between the two and then make the right choice.
Credit Card vs. Personal Loans
Credit cards and personal loans both appear to be the most convenient way of deriving funds especially when it comes to an emergency. Both are unsecured in nature and offer quick cash for any purpose. But, the only difference between credit cards and personal loans is the amount you can borrow. In the case of personal loans, you will be able to borrow a lump sum amount of money that you can repay over a period of time. On the contrary, a credit card offers you a line of credit that you can use as per your needs of spending.
People often get confused about which one is to choose- personal loans or credit cards. Both have their own advantages. However, personal loans
are considered the most lucrative option for number of reasons. Wondering why?
Let’s dive deep into the facts and understand why personal loans are useful.
Personal Loans Pros
Personal loans are quite different and more beneficial than credit cards. To begin with, check out the pros of availing personal loans.
• Personal Loan Has Lower Interest Rates Than Credit Cards
It is no denying that people look for affordable borrowing options. Despite the ease of spending that credit card brings, people find personal loans more helpful in the time of need. The first and foremost benefit of using a personal loan is that the rates of interest are lower than the credit cards. Borrowing funds through personal loans seems more beneficial than using a credit card when we talk about the rates of interest charges on them.
• Fixed Monthly Payments Help You Keep Up with Your Budget
Unlike credit cards, personal loans let you make a fixed monthly payment that helps you keep track of your budget. This means you can easily meet your financial commitments without getting on your nerves. The repayment of personal loans will be fixed which means you have to pay a specific amount every month until you repay the borrowed amount. This way you can easily keep up with your budget and meet your financial commitments without any inconvenience. Furthermore, you can focus on your future financial goals even if you are currently dealing with loan repayments.
• You Can Borrow A Large Sum with Relative Ease
Credit cards often limit a borrower to borrow funds according to their line of credit. However, personal loans bring you a chance to borrow large sums quickly to deal with expenses. Whether it is an emergency expense or any large purchase, personal loans will let you borrow money according to your recent circumstances. In fact, you can qualify to borrow funds easily and the amount will disburse into your bank account right after. No matter what the situation is, personal loans with a large sum can come to your rescue in an instant.
• Unsecured Funds Come Your Way
Getting unsecured loans is more than pleasure when your financial life is not on the right track. Just like credit cards, personal loans allow you to borrow funds without bringing any co-signer or pledging collateral against loans. However, you will stand a chance to withdraw a large amount through personal loans and accomplish your needs with relative ease.
Benefits are infinite when we talk about personal loans. Such benefits make personal loans the most preferred choice when it comes to borrowing funds in an instant. You can also avail personal loans with no impact on your credit rating. Moreover, personal loans will help you prevent getting into a never-ending loop of debts which seems next to impossible if you have credit cards.
When to Use Personal Loans?
Getting a large amount all at once is possible with personal loans only and situations are there in which taking out these loans seem like a win-win choice. If you are wondering when personal loans look like a good alternative, then you must consider the following situations:
• When You Want To Merge Large and High-Interest Debts
Borrowing a large amount that you can pay over a few years to consolidate your existing debts seems absolutely a fine option. Personal loans will help you merge the high-interest debts that you can pay at once and save bucks.
• When You Need to Cover One-Time and Large Expense
When it is all about your large expense just like a home remodeling project, you might need an instant flow of cash. Certainly, taking out a personal loan is the right choice to cover one-time and large expenses which seems impossible with a credit card.
• When You Need More Than Your Line of Credit
The line of credit that your credit card gives can hold you from borrowing as much as you need. This is why taking out personal loans to acquire more funds than your line of credit is beneficial. And that is another situation where personal loans actually come in handy.
Using a credit card is beneficial if your needs are small enough. However, personal loans can be your true companion in time of need when you are required to borrow a large sum from an external source. Thus, this is the reason why personal loans are the most preferred choice for everyone.