When financial emergencies hit you, and you don’t have enough funds at hand, what are the options that you can go for? Two of the most immediate options to cope up with it that you may consider are personal loans and credit cards.
On the other hand, when you have a large purchase to make like a TV, Inline Fridge Filters, and more, then you may think of having a credit card that you can swipe and get anything.
But it does come with the hassles of paying the credit card bills at the end of the month. On the other hand, a personal loan does not make you overspend.
Hence, from coping with financial emergencies to making purchases, a credit card is best for short-term buys and a personal loan for larger purchases.
These days, it is also possible to use any of the available personal loan apps of leading lenders and make applications conveniently.
What are the advantages of applying for a personal loan overtaking a credit card? Let’s explore in this post!
Benefits of applying for a personal loan overtaking a credit card in India
- Compared to a credit card, a personal loan comes with a lower interest rate and hence; you can expect to repay a lower EMI than what you will on a credit card.
- You can repay the personal loan over a fixed tenor means you are aware of the exact EMI amount that you will need to manage. On the other hand, a credit card may also let you convert your purchases into EMIs. But being a revolving credit, you may use its limit further and may have to pay a larger total amount due. Servicing only the minimum amount due may just prevent you from hampering the credit score, but in turn, you may have to bear repaying more than what you used.
- You can apply for a personal loan using any of the personal loan apps in India and for a much larger amount than the overall credit limit of your credit card.
- The overall process of applying for a personal loan is now dead simple – you can apply for easy loans using a loan app right on your smartphone and save time. If everything is good to go, then you may get faster disbursement of funds into your bank account.
- If you have a cibil score of 750 and more, then you can apply for a higher personal loan limit. Leading banks and NBFCs may let your borrow as high as up to Rs.25 lakh – a limit that is much bigger than you get on your credit card.
- The tenor that you can use to convert a credit card purchase is much shorter than what a personal loan may offer. Most of the reputed lenders may let you stretch the personal loan repayment over 5 years and help you manage smaller EMIs.
- You can also not use most of your credit limit on your credit card as using more than 30-40% is considered bad for the healthy management of your credit score.
You are now aware of the basic advantages that a personal loan has over credit cards. If you are ready, then you can download any of the best personal loan apps on your smartphone today and avail the facility to cover your urgent needs and purchases.