Personal loans or credit cards, which is a better financial product for making big purchases?
By: Hitesh Khan/
Image credit: Hloom via Flickr
Should you use a personal loan or credit card when making major purchases? Assuming that you have good credit and can qualify to borrow money, here are some things to consider when choosing between the two financial products.
Best interest would determine the financial product you should use for big purchases
The first thing most people look at when borrowing money is the amount of interest being charged. It usually isn’t a problem to find personal loans with fixed rates. Having a fixed interest rate means there won’t be any surprises when you receive your loan statement. You’ll always know exactly how much to set aside each month for your loan payments.
Credit card interest rates sometimes fluctuate. While you may initially be offered a low introductory rate when you sign up for a card, ultimately that interest rate will rise. So you’ll have to be ready to make higher payments when the rate changes. Another thing to consider is that being late with a credit card payment is likely to result in the interest rate being raised significantly.
Personal rates on loans do tend to be lower than what is offered for credit cards. But if you don’t have the best credit you won’t qualify for the lowest rates for a loan.
Where to get a loan
There are several places you can go for a loan. Banks and credit cooperatives are popular with many consumers. However, you may actually get more personalised attention when applying for a personal loan from a non-bank financial institution. A non-bank financial institution also may be more likely to reconsider a loan request that has been turned down for some reason. Borrowing from a credit cooperative, for example, is limited to members only so you would have to meet the requirements for opening an account.
Depending upon the type of purchase you are making, you may be offered a loan from a retailer. Stores that sell furniture, appliances and electronics frequently offer loans to customers. Other types of retailers offer financing too, but keep in mind that the interest rate you’ll pay on a store line of credit is usually higher than if you borrow a loan from a bank or credit cooperative.
Personal loans are a way to use tomorrow’s income today, and unlike other loan products like mortgage loans or education loans, the process involved to apply for best personal loan is relatively simple.
But you must note that the interest rates are much higher than, say, for a car loan. This is because personal loans are unsecured loans, which means that the personal loan is not backed by any asset. The loan amount and interest rate depend on different parameters such as your income, credit history, repayment capacity, and others.
For big purchases, be mindful that even the best personal loan comes with high interest rates and continuous default will put you on a downward spiral.
If you’re thinking of big purchases, here are some of the lowest personal loan interest rates offered by various banks:
Personal loans are basically unsecured loans which typically from $1,000 – $100,000 with fixed or variable interest rates that can be used to make a large purchase or to consolidate debt. Borrowers can use personal loans for credit card debt consolidation, business expansions, home improvements, medical bills and other major life expenses. But which really is a better financial product?
0% installment payment plan will be helpful for big purchases
You can stretch your dollar further and get what you want with 0% Installment Payment Plan (IPP) which offer interest-free installment payments of up to 36 months at no additional cost. Some retailers allow customers to buy gold, jewellery, electronic gadgets like iPhone, iPad, smart phones, computers Smart TVs, music systems and a vast brand collections) using this facility of 0%interest plans of various Banks in Singapore.
All you have to do is tell the cashier at the retailer that you want to pay by installments leveraged up to 36 months from the prevailing plans of various banks. In this, credit cards become the better financial product because it allow you to enjoy using the product you purchased right from the day one and pay at installments of your choice at no extra cost and at 0% interests.
If you are in a financial crunch and are searching if personal loans useful to expand your business, loan consultants can set you up on a path that can get you a it in a quick and seamless manner. Loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
Affordability Tools can help you make better borrowing decisions. Good Calculators for example, help you ascertain the fair value of a property and find properties below market value in Singapore.
If you are looking for a new home loan or to refinance, Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all their services are free of charge. So it’s all worth it to secure a loan through them for your business expansion needs.
The post Big purchases for your business, should you use credit cards or loans appeared first on iCompareLoan Resources.