Would it be better to ask for a single loan or, not wait, and go out and buy what you need with your credit card? That dilemma has a solution.
The differences between a single loan and a credit card are important. Yes, it is true, both are financing lines. Both are offered by banks, banking companies and municipal savings banks. Both help you in times of crisis. And both allow you to grow.
The financial decision is to pay for the study or the holidays with your credit card or with the resources you get for a single loan.
What will be more convenient?
single loan or credit card
Its general characteristics:
- Guarantee will be required depending on the customer’s borrowing capacity.
- You can request it for an amount of $ 2,000,000.
- It has terms of 12, 24, 36, 48, 60 and 72 months, depending on the amount requested.
- Loans of less than $ 10,000,000 will have a maximum term of 36 months
- Loans greater than or equal to 10,000,000 will have a maximum term of 60 months.
- Terms longer than 60 months require a real guarantee.
- Fixed monthly installment due with payment of principal and interest.
Credit cards have these conditions:
- The term can be up to 36 months (very few offer more time).
- The quota varies according to the income of the person.
- Annual rates range from 21.61% to regularly and well managed 29.19% (Data as of February 2019)
- If you already have the card you don’t need approval and you could use up to 100% of the line of credit *.
As you can see, the term and rate are different in single loans and credit cards.
And that couple of factors is what should guide you to make the decision.
Which to choose
The decision will be based on the answers to these questions:
- What do you need the extra money for?
- How much do you need?
- When can you afford it?
The normal thing is to use the cards in commerce, in retail, in restaurants and bars. People generally “like each other”, spend, consume with cards.
On the other hand, single loans are widely used for study payments, home renovations, starting a business or vacation. They are, as a rule, investments.
For example, if you want the money to buy a television, credit card is probably a good alternative. You will pay a higher interest rate, but you could pay it in a few months.
But if what you need are several televisions and computers to start a business, perhaps it is best to ask for a loan. You will pay less interest.
The amount is the second factor to evaluate.
- If the amount is small, it may not be justified to start a credit approval process (whether online).
- When the amount is considerable, five, six, seven times the income, a credit will be the most convenient.
Finally, the term.
- If you can pay in a few months, three, for example, and the amount is low, the card will be a good option.
- If you require at least five years to pay the investment, a single loan is the best alternative.
In general, our recommendation is to use the shortest possible time to pay the credits.
Less term, less interest, better business.
Holidays are a good example of how to use both financing lines:
A personal credit will be cheaper.
But buying airline tickets with cards has great benefits, such as medical insurance, car rental discounts or accumulating points and miles.
How about, requesting the loan, with a twelve month term (because it is the time you estimate you will need), buy the tickets with the card and use the credit resources to pay the credit card for a fee?