A Cheap loan or a credit card debt – Which is more beneficial
Life’s requirements are unlimited and unpredictable. You never know when life meets an emergency followed by acute financial crisis. To manage unforeseen and abrupt crisis, people often need to take out a loan or owe debt. Some people borrow cheap personal loans, while other owe credit card debts to fulfill small financial obligations like paying medical bills, paying for college admission, repairing cars etc. in some instances, cheap loans work better, while in other cases credit card debts would be better option. Depending on your requirement, you may either opt for a cheap personal loan or a credit card debt.
Points to be considered
Borrowing a cheap personal loan or owing a credit card debt is perhaps the best and the most feasible option, while seeking money to cope with sudden cash crunches of your life. But the question is which option you should go for; cheap loans or credit card debt. Discussed below are some points that you can consider while choosing a source of easy and fast cash.
Loan amount and loan period – These two are the most vital decisive factors. Usually a small loan is always expensive. High cost is also associated with short term loans. Although there are a number of ways through which you can cut the cost, yet credit card debt would be a better option while you’re in need of a small amount of loan for a short period of time. Some credit card companies allow new card-holders to spend on the card at 0 percent interest for the first year. If you make any purchase on your credit card with 0% interest scheme, make sure you pay off the debt in time to avoid paying interests.
Purpose of seeking money – If you seek the loan for any particular purpose, then cheap loans are the best; credit cards can hardly beat it in this respect. Moreover, due to structured repayment option, you’re able to know how loan you’re taking out the money for and what it may cost you every month till you repay completely. But a loan won’t be cheap for you, if you’re trying to lower your current credit card debts. For this purpose, you may opt for a credit card balance transfer deal as it would be cheaper than a loan.
So you can see that for some reasons cheap loans are better than credit card debts, while for other credit card debts are more beneficial. Actually it all depends on your needs and ability to pay back the money. Cheap loans have many benefits, but some drawbacks too. The benefits and drawbacks of cheap personal loans are discussed here.
Benefits of cheap loans
Cheap personal loans or cheap loans offer a number of benefits; some of them are mentioned here.
No collateral – Cheap loans are unsecured loans that don’t require the borrower to use any asset as collateral. Therefore, if you don’t have any property to produce as collateral to secure the loan, you’re eligible to get a cheap personal loan. Moreover, even if you fail to repay (not desirable) the loan in time, you won’t lose anything.
Minimum paperwork – You don’t need to do any hefty and lofty paperwork to apply for and obtain cheep loans from online private lenders. To get such loans all you need to fill out a simple online form and you’re almost done. Generally private lenders review the application fast and if it qualifies then they disburse loans within a single business day.
Cheaper than credit card debt – Borrowing cheap loans from private online lenders is better than borrowing on credit cards. A loan always follows a structured repayment method, but credit cards don’t. Accumulating debts along with interests on credit card may cost you a fortune. Such debts often become delinquent and to pay off them people need to get help of debt settlement or debt consolidation. However, the situation doesn’t become so bad in case of unpaid loans. You may have to pay a lot in interests, but don’t have to pay an arm and a leg. Moreover, interest rates levied on chap personal loans are cheaper in comparison to interests charged on credit cards.
No credit required – The lenders of cheap loans usually don’t conduct any credit check of the borrowers. So irrespective of credit profile, you can expect to get a personal loan while you’re in need of quick cash. Although personal loans are charged with higher interest rates while compared to traditional loans from banks, yet such loans don’t require the borrowers meeting strict criteria.
These are just a few of many benefits that you can avail if apply for cheap loans.
Drawbacks of cheap loans
It is true that you can get many benefits if you take out cheap loans, but such loans have some drawbacks too and those are,
High interest rates – Cheap loans mostly come with very high interest rates that sometimes the borrowers may need to pay even a fortune in interests. However, if the loans can be paid back in time, then they can avoid such an embarrassing situation.
Rapacious lending institutions – Since the business of personal loans is a lucrative one, nowadays many illegitimate lenders want to take advantage of this high-risk, but profitable lending practice. Their main focus is to make huge profits by befooling distressed borrowers. However, if you keep yourself aware of such practices, you can surely avoid dealing with a predatory lender.
Before you apply for cheap loans, make sure you shop around and compare interest rates and other applicable loan terms to make the best deal as per your requirements. You must always read the offered documents and the loan agreement carefully before signing off on it.
For the best interest rates on cheap loans, you may deal with any of the lenders enlisted on our site. Almost every member of our network is accredited by BBB.