In recent times, personal loans have gained great popularity among loan seekers. This is because personal loans are unsecured loans which can be taken so as to meet any desired monetary expense.
Personal loans charge you a higher rate of interest than other kinds of loans, but in any case, these are offered to you without any stringency or restriction of use. Some people prefer credit cards over personal loans, but little do they realize that credit cards are only momentary relief.
The debts keep accumulating and you may even end up in an everlasting debt trap. Personal loans, on the other hand, give you the freedom and flexibility to finance your cash crunch situation over the long term quite comfortably.
All you need to do is pay back the loan in easy monthly installments on time, and build a sturdy credit report rather than dropping low on your credit score. Let us look at some of the other reasons to choose personal loans over credit cards.
1. Financing your wedding and important life events
Credit cards might offer you great reward points and perks, but these are not suitable for your big wedding-related expenses. Personal loans for your wedding and important life events are offered for over a good amount of time and you can choose to pay back the loan amount comfortably in a suitable EMI scheme. Personal loan interest rates are lower than the interest rates charged by credit card companies.
2. Financing your health-related expenses
Medical emergencies often put us in a tight situation. In times as these, most of us are on the lookout for a lump sum amount of money at very short notice. To cater to these ad hoc medical expenses, personal loans are here! Further, you tend to qualify for bigger loan amounts in comparison to credit cards.
3. Financing your new business
Starting a new business requires a large amount of working capital. Using your credit card for meeting the required expenses might not be a good idea. Your credit card designed for business purchase rewards can be put to use at a later stage of your business journey. While starting a new venture, it is always ideal to go for an unsecured personal loan and pay off the low amount in the forthcoming months without a heavy financial liability.
4. Financing your home improvement
Personal loans come with lower interest rates and these can help you define your home improvement goals with better clarity. Credit card companies may offer you various cashback offers related to home improvement, but you must understand that these are offered only at specific times of the year, that too with much higher rates of interest. So, let’s say, if you miss out on remodeling your home on a promotional period offered by your credit card company, the APRs are ought to go high.
Personal Loan Vs Credit Card: Which Is Better?
In a nutshell, personal loans are the best fit for those looking for long-term finance. Credit cards might be a temporary solution or quick monetary needs, but the end result in the long run may turn out to be a little more hefty and complicated.