If you need to smooth out your income, a credit card might be best for your situation. But a personal loan may have many advantages you weren’t aware of.
Below are some points to consider when deciding if it might be better for you to take out a personal loan rather than open a credit card account.
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Great for Large Purchases
If you are about to make a large, one-off purchase, a personal loan might be for you. Where credit cards tend to work for financing regular spending, personal loans suit large expenses that require a single payment. If you’re planning an engagement party or you’ve finally scoped out time for the home improvements you’ve been planning, a personal loan might be more suitable. Whether your current paycheck just won’t cut it, your credit limit isn’t enough or you could do with just a little extra cash, a personal loan could be right for you.
The Benefits of Regular, Fixed-rate Payments
An advantage of personal loans is that they tend to be paid back in regular, fixed installments. If you’re planning a big life event, like a relocation for work, then a personal loan will slot neatly into that planning. You know where you stand: you apply for the money, are given a repayment plan and account for it going forward. Where a credit card might have a variable rate attached to the outstanding balance each month, personal loans tend to be paid back in fixed monthly payments. For this reason, they can be factored in as a planned cost in advance.
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The Chance to Land a Lower Rate
You’ve guessed it: as personal loans are usually one-off sums of cash with fixed installment repayments, the interest rate may work out to be less. Credit cards with variable rates are answerable to the whims of the prime interest rate. That means you might end up spending more on your balance than if you had a fixed lump sum due monthly. Personal loans, on the other hand, may provide you with just that: a known quantity on a fixed schedule.
The Joys of Simplicity
In keeping with the above, personal loans may also present a level of simplicity. Personal loans can be used to consolidate debts at higher interest rates to become one single payment at a lower fixed rate. These existing debts at higher rates may originate from some credit cards and other accumulated debt. Consolidating your debt may save you not only money but, with one monthly payment, you can save yourself a headache as well.
Personal loans present a streamlined option to fund one-off life events. Where credit cards satisfy regular outgoings and more uncertain spending habits, personal loans can accommodate those of us with a single expense and a known set of costs. Of course, it’s all personal, which is why you are always able to better for you to take out a personal loan compare rates and offers before making a decision. Personal loans are one great way of accounting for a known future.
If you are thinking about your next big life purchase, let Fiona match you with personalized loan offers tailored to suit your needs.
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