Swipe vs. Borrow: Why a Personal Loan Might Be Better

 No matter how well prepared you are, emergencies can arise any time or there may be situations where you run out of funds while fulfilling your dreams. In these situations, most people consider personal loans or credit cards depending on your financial requirements. It's possible that many people are unsure of the best choice.  Personal loans are suitable for high-end spending while credit cards are perfect for short-term and small expenses. The choice will depend on your needs or emergency situation as well as how long you would be able to repay it.

Personal Loan Vs. Credit Card

Here we have explained in detail about personal loans and credit cards.

Features	Credit Cards	Personal Loan
Application	You can either apply for one in person or online at a credit card provider.	You can apply for personal loans online or at banks and other financial organisations.
Purpose	Is generally used for small purchases	It is ideally used for big purchases like medical emergencies, higher education, etc.
Repayment	Paid by the customer at the end of the credit period	Paid via monthly EMIs to the financial institutions.
Disbursement	Paid straight to the merchant by swiping the card	The full amount is given to the customer at once
Tenure	Depends from card to card but usually the tenure is of a lifetime	The tenure is between 1 to 5 years
Borrowing Limit	The credit limit is predetermined	It is calculated by the financial institution based on income proof, credit history, etc.
Interest Rate	If payments are late or partial, the rate will be slightly higher than a personal loan.	Since interest rates vary from bank to bank, it depends on the type of personal loan you want.

 

Credit Card Or Personal Loan - Which is Better?

There is no particular answer to this as it varies from person to person. While a credit card can be the right choice in one situation, a personal loan might be suitable in another. Before opting for any of the choices you need to ask the following questions to assess what is perfect for you.

Why do you need funds for it?

If you need money for a larger purchase, a personal loan might be right for you. If you want constant access to credit, a credit card can be a better choice.

How do you manage your repayments?

Credit cards, as we all know, are an ongoing form of credit, whereas personal loans have an end date. You might want to think about how responsible you are with your expenses when deciding whether a personal loan or credit card will meet your needs. If you think you may be more tempted by the credit line sitting there, then a more structured repayment schedule, such as that offered by a personal loan may be worth considering.

It is important to consider Your Options Extremely Carefully

How much debt do you have, and does it include credit card debt as well as loans? In order to keep your finances on track, make sure you will be able to carry across all of your accounts for consolidation.

Conclusion

The decision between swiping your credit card and opting for a personal loan ultimately depends on your financial situation and goals. While credit cards offer convenience and instant access to funds, they often come with high interest rates and the risk of accumulating debt. On the other hand, personal loans provide a structured repayment plan and lower interest rates, making them a more suitable option for larger expenses or consolidating existing debt. It's crucial to assess your needs, budget, and financial discipline before making a choice. In many cases, a well-managed personal loan can offer a more financially responsible and cost-effective solution compared to the allure of easy credit card spending. LoanTap offers personal loans at affordable interest rates and easy EMI options. 

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