Understanding Personal Loans: A Better Alternative to Credit Cards?

We can find endless options while opting for a reliable source of financial funding. However, browsing the right fund provider is often tricky. Therefore, it becomes important to conduct accurate research on the pros and cons of each fund source and consider one.

To conduct accurate research, you must consider a few factors like amount, interest rates, repayment terms, disbursement time, and risk associated with the source fund. While choosing amongst many, making an informed decision that balances one's financial goals with risks becomes essential.

Moreover, among several sources of funds, in this blog, we’ll have a deep discussion on 2 important sources- Personal Loan and Credit Cards.

What is a Personal Loan?

A Personal Loan is an unsecured loan form provided by Financial Institutions that does not require collateral or asset submission. It comes with the feature of flexible repayment options, readily approved loans within minutes, and fixed monthly installments set for a period of 6 months. The funds are ideal for several personal purposes, such as protecting medical expenses, covering major life events, purchasing appliances for home renovations and meeting unexpected life emergencies.

What is a Credit Card?

A Credit Card is a flat card provided by the Bank as a pre-approved credit facility to its customers. The card has an inbuilt credit limit that a customer can use to purchase goods and services. This credit limit of the person is decided on the credit score & credit history of the user. The credit card limit increases as and when you repay the spent amount.

What are the benefits of choosing a Personal Loan?

Nowadays, applying for an online personal loan has become easier because of the digital wheel and engagement of AI-driven technologies at every step. These advancements have simplified the loan application process, reducing the time and paperwork associated with loan approval. With these advancements, here are some of the major benefits of applying for a personal loan without the hassle of traditional banking methods:

Lower Interest Rates

One of the significant advantages of a personal loan is Lower Interest Rates. For customers with a well-maintained credit score & history, the interest rate is lowered when taking a Personal Loan. Considering the following, it becomes helpful for the customer to save money in the long term.

Fixed Repayment Schedule

Another significant benefit of a personal loan is a fixed repayment schedule. With a personal loan, borrowers benefit from the predictability of fixed terms and timely repayments. This consistent awareness allows you to make better financial planning as it provides insight into monthly spending in advance.

Larger Borrowing Amount

When you need to borrow a considerable amount of money, go for a personal loan. It is very beneficial in the long term because of its low interest rates and Annual Percentage Rates (APR). Nowadays, personal loan apps give access to large funding for personal purposes such as home renovations, medical expenses, or home appliances.

Instant Approvals

The involvement of digitalisation in the financial sector has promoted the growth of real-time transactions and quick loan approvals. You can get your personal loan approved instantly from the comfort of your own home. You do not have to visit the bank to apply for the loan or to submit documents. The entire loan process is carried out from the comfort of your home.

Improved Credit Score

Adding personal loans to your credit profile improves your credit score in the long run. A well-planned and well-managed loan repayment can positively impact your credit score. Timely EMI repayments reflect your responsible behaviour towards your financials. Eventually, it results in improved creditworthiness.

Reduced appeal to Overspend

Personal loans provide a lump sum amount of money as per your loan application. Once you have consumed the total amount, you cannot overspend without reapplying for another loan. Therefore, a Personal loan is a sound option where you can limit your impulsive spending habits and nurture your disciplined financial behaviour.

Difference between Personal Loan & Credit Card

..which is the best?

While both personal loans and credit cards are best in their places and reliable too, the decisions between the two wholly and solely depend on individual circumstances, goals, and preferences. It is important to take time to know and assess your needs and make an informed decision that aligns with your current situation. Moreover, we always advise you to keep your financial situation, income pattern, borrowing needs, and repayment capacity in mind. This analytical approach will enable you to make sound decisions when choosing your next financial funding source.

However, for you, if a personal loan is the preferred option, we encourage you to consider Chinmay Finlease Limited as your trusted loan provider, offering a variety of loan features to meet your financial needs and avail of several loan-related benefits to make a reliable choice.

Source Link: Understanding Personal Loans Better than Credit Cards