When it comes to managing finances and accessing funds for various needs, two popular options often come to mind: Personal loans and credit cards. Although both represent a way to gain access to funds, they contrast sharply regarding the interest rates, the method of reimbursements, and solidity. Also, the lending company plays a significant role in this matter.
If you are getting a personal loan without research, the cost can be much higher. On the other hand, if you are taking it from a company like Rupee112, the cost will be manageable and the repayment structure will be as per your comfort.
Before moving ahead with your decision, give a check on why personal loan is generally a better choice in relation to credit card for the majority of the uses.
Lower Interest Rates
One cannot fail to mention the attractive interest rate as one of the primary advantages of a personal loan if taken from Rupee112 when compared to a credit card. Personal loans are usually less costly than credit card rebates since they have a lower cost APR.
Credit card interest rates may go up to 20%. 99% while the interest rates on personal loans start from as low as 6% to 36% based on the credit score. Such a difference, therefore, means that large loans or loans repayable over a long period are likely to attract lower interest rates..
Fixed Repayment Schedule
Another known fact about personal loans is that they involve fixed terms on the manner of loan repayment, information that can be so useful if an individual is planning for their finances. A mortgage loan, as the name suggests is a loan offered against a property; while a personal loan for, as a borrower, you know the exact amount you have to pay every month and when the loan is going to be paid off completely. Such predictability can assist one to plan financially and ensure that one is not pushed to the wall and accumulates more credit balances.
On the other hand, credit cards only need you to make at least a minimum payment each month, longer than that means much more in interest expenses for the outstanding balance.
Higher Borrowing Limits
People requiring a higher amount of money need personal loans as they offer even more significant credit limits as compared to credit cards. Personal loans can allow large sums, which depending on the creditworthiness of the applicant, can be a few thousand dollars to tens of thousands of dollars, which can be used for large expenses, such as the repair and construction of houses, treatment, or the consolidation of debts.
Credit cards otherwise are comparatively issued with low credit limits which might not allow a user to fulfill his or her major financial requirements.
Better for Debt Consolidation
Thus, it should be noted that personal loans are very handy when it comes to the consolidation of debts. If you have many credit card debts with very high interest rates, and you take a personal loan to clear all your debts, then instead of doing multiple credit card payments, you only do one payment and you also reduce the interest.
It can make your process of paying off your debts easier and can make you debt-free at a much earlier time than estimated.
Conclusion
Indeed, both personal loans and credit cards have their effective uses in financial management, although the former is highly beneficial in many circumstances, particularly because it provides an opportunity to borrow larger amounts of money and take over equal obligations efficiently when compared to credit cards.
The less rates of interest, the more fixed periods of repayment, the more amount borrowed, and the more organized repayment schedule make personal loans reasonable and sound financial.
This means that when you opt for a personal type of loan from a loan-providing company like Rupee112, then you stand to benefit in so many ways since you do not have to fall prey to credit cards which charge very astronomical amounts of interest.
