Getting loans sanctioned today has become easier. You get the Personal Loan quickly by sending an online application over the bank or financial institute’s website. Most lenders ask for minimum documentation for passing the loan. This helps you when you are caught in an economic crunch and achieve your financial goals. But most use Credit Cards for paying their debts often.
However, there are some scenarios where it makes sense to apply for Personal Loan. Here is why:
Credit Cards and Personal Loans are two familiar financial tools that offer you funds when you need them instantly. You use the Credit Card at the ATM, Debit Cards, for withdrawing cash. But when it comes to Credit Cards, you only get a fixed sum based on the credit limit prescribed by the bank. Also, exhausting the credit limit affects your credit scores. Meanwhile, an online Personal Loan enables you to get the sum instantly.
This way, you receive immediate cash, and there is no boundary of the credit limit. You only need to meet the Personal Loan eligibility criteria.
Scheduled repayment and interest rates
With Credit Cards, it is easier to make minimum payments as opposed to structured payments. While this is a good choice, you might end up stacking on a lot of debt while the interest rates keep increasing. The irony is you might end up applying for Personal Loans for repaying the debt. However, if you opt for the loan directly, you need to follow a fixed repayment structure, which allows you to repay the debt at a fixed Personal Loan interest rate.
These come at affordable equated monthly instalments within a fixed schedule. You need not worry about the increasing rates.
Longer tenure for the borrowed sum
The fact is that the Credit Card interest rates are high. The only way to get no or low rates is to pay the card dues soon so that it does not cost you too much. Moreover, you do not get longer tenures for repaying the debt generally. Meanwhile, you can repay the Personal Bank Loan in flexible terms, lasting up to five years. So, if you know that you cannot repay the borrowed sum soon, it is ideal to opt for the loan.
Improves credit score
Contrary to what it sounds, Personal Loans help improve your credit ratings. Since Credit Card providers charge higher interest rates, it is challenging for some even to make minimum payments. High rates raise the defaulting chances, which thereby impacts your score negatively. Now, you can consider the loan and repay EMIs timely as it improves your credit report with each instalment.