The basic differences between cash loan and bank credit
When you are in need of cash and thinking of making a loan you can consider easy cash sources: personal cash loan or bank credit card loan.
Which you choose will depend on the amount and length time you need the cash before you repay it. The basic consideration is how you can secure your needed cash without burdening you with high cost or payment terms that put you under pressure. Let us see how cash loan differs from bank credit so you can more clearly decide which to choose for your purpose.
- Interest Rate. Cash loan usually has lower interest rate than bank credit.
- Amount. Cash loan have higher amount depending on whether secured or unsecured terms and is good for big purchases, whereas bank credit is usually for small purchases.
- Payment Terms. Cash loan usually takes 2 to 5 years to pay in equal installment that includes both principal and interest. Bank credit has payment terms that can be paid within a month or several months.
How to Choose Which to Avail
What you choose between these two sources of funds will depend on your purpose and the benefits you want to enjoy for your borrowed funds.
If you need funds for short-term expenses such as an unplanned trip, buying a gadget on sale or simply monthly living expenses securing credit card loan will be a better option. It is easier to avail especially if you have good credit rating and you will not have to offer a collateral. It is also match for small expenses since the interest rate is normally high and with only a small amount of loan you won’t feel much the bite.
And when you are really short of cash you can only pay partially or interest only which is computed based on average daily balance. But it is recommended that credit card loans be paid in full during month end to avoid escalating cost of accumulated interests over longer periods. Penalty charges for failure to pay even interest could increase your financial burden.
But for bigger funding needs your option is to avail of cash loan from the bank. They can be secured or unsecured and offers lower interest rate when you have a good credit standing. With personal cash loan you get the loan in lump sum with maturity date of 2 to 5 years. You get to pay your loan in equal installment payment that includes principal and interest. It is best used for longer-term financing that could include things like starting a small business, consolidating credit card loans or other loan. Since the interest rate is low, being delayed or unable to pay by month end the installment due.