All of us would like to be in a position such that we never have to go into debt or borrow any money at all. However, that is often not the case. We need to take out loans for a variety of purposes, be it paying for education, a vacation, a wedding, home renovation, etc. Some of them require a large loan amount, and some of them require a smaller loan amount on an immediate basis.
When thinking on loans, most people immediately look at personal loans. It’s true that you can get a personal loan to pay for a number of things such as marriages, home renovation, etc. However, there’s a far more immediate and convenient loan option that most people don’t even consider. You can even avail of credit card loans for smaller loans on an immediate basis.
Below, we’ll compare various aspects of both personal loans and credit card loans to determine which is more suitable for you.
The biggest hurdle when it comes to getting a personal loan is that it takes several days to get processed and for your account to be credited. As such, if you want to pay for something immediately, your best option is to go for a credit card. You can simply swipe the card and make the payment, and then call your customer care to get them to convert the payment into a loan.
The Amount of Loan Required
Credit Card loans generally come with limits. These limits may be a lot more than your monthly income, but they oftentimes fall short of important payments. The credit limit you get is usually in accordance with your earnings. However, a personal loan can be used for making far larger payments.
Credit card loans and personal loans come with different pay back options. These are both extremely subjective so you’ll have to do your research to figure out which one gives you access to a pay back timeline that suits your needs.
Credit card loans generally have far higher interest rates than personal loans. This may make personal loans seem more favorable. However, if you are willing to pay off the credit card loan within a short window of time, you can avoid that interest rate altogether. As such, you will have to decide upon this depending on how quickly you want to pay back the loan.
If you decide to repay all the personal loan before the due date, you may incur a charge of about 2% to 3%. However, you can pay off the credit card loan and close it as soon as you want without any foreclosure charges.
These are some of the primary determining factors based on which you can decide whether to go for a personal loan or a credit card loan.