In recent years, the concept of “Purchasing Now, Pay Later” has gained immense popularity among the people of our country. As they seek complete flexibility in managing their finances, two prevalent options emerge – Personal Loans and Credit Cards. Both of these financial avenues offer the convenience of delayed payments, but they come with distinct features, pros, and considerations.
(Tip: Keep your credit report in the positive sphere)
While both of them offer the convenience of delayed payments, understanding their ins and outs can help individuals make informed decisions that align with their financial goals. Today, in this blog, we’ll dive deep into the advantages and considerations of both options.
Personal Loans
These structured financial instruments that are designed to meet various individual needs are some of the most popular, especially after the COVID-19 outbreak. When it comes to “Purchasing Now, Paying Later,” these loans offer endless advantages over credit cards.
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Fixed and Lower Interest Rates
These types of loans come with fixed and lower interest rates, offering potential borrowers stability and predictability. Unlike credit cards, which often have variable rates of interest, this helps in knowing the exact cost, ultimately enabling borrowers to plan and budget in an efficient manner.
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Structured Repayment Plan
These loans come with a predetermined repayment schedule, allowing potential borrowers out there to plan their finances in a certain manner. Fixed monthly payments make it relatively easier for individuals to plan their overall budget.
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Debt Consolidation
If, by any chance, a borrower has multiple high-interest debts, such as credit card balances, an apply personal loan can be used for debt consolidation. Simply by combining various outstanding balances into a single loan with a lower interest rate, individuals can simplify their finances and reduce overall interest expenses.
Credit Cards: Proceed with caution!
While credit cards offer immediate purchasing power and flexibility, they come with specific considerations that individuals should be mindful of when opting for the Pay Later facility.
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High-Interest
Credit cards are well-known for their high interest rates, especially on revolving balances. If users are unable to pay off their balances in full every single month, the accumulated charges can quickly become a financial burden.
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Minimum Payments Trap
While credit cards offer the flexibility to make a certain amount of minimum payment, this leads to a debt cycle in the long run. Individuals who only make minimum payments may find themselves trapped in a long-term repayment cycle, paying significantly more in interest over time.
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Impact on CIBIL Score
Carrying high balances or missing card payments can definitely have adverse effects on creditworthiness. Therefore, it’s quite crucial for individuals to manage credit card usage in a responsible manner.
Why Stashfin?
At Stashfin, we offer an instant personal loan with just a few taps without going anywhere. If you plan to avail a loan from us, we offer such a facility that you’ll not have to pay any interest on the amount you avail (terms and conditions apply). Download our application on the Play Store/App Store or visit our website to explore.
Conclusion
All in all, this trend offers complete flexibility to consumers, but it’s crucial to weigh the options between personal loans and credit cards. However, if you are planning to avail, a personal loan is a much better option as it offers a structured repayment plan with a fixed rate of interest, which is quite suitable for larger purchases.