Signature Personal Loan

Choose A Personal Loan Over A Cash Advance For Better Loan Rates

There are different types of loans that you can avail for your personal and business needs. Varying in loan amounts to interest rates, types and other kinds of costs, you can choose a loan that suits you best. From short term personal loans, to cash advances that will protect you against sudden emergencies, to long term home and vehicle mortgages that will help to protect your prized assets. However, considering today’s high loan rates, financial experts advice that it is better to choose a personal loan v/s a cash advance any day.

The best way to understand the process is to understand what a personal loan and cash advance is. Cash advances are typically loans that are taken out against credit cards by card holders. Basically a cash advance is an option that cardholders can use to borrow actual cash or currency against their present credit balance. Generally, the amount of cash available to credit card users is only a tiny percentage of their total credit limit. Not only that cash advances generally have a higher rate of interest charge than most other loans and prove to be more expensive in the long run.

That is because, the rate of interest charged on a cash advance loan is often as high as 23%. Also, it is rare to enjoy a grace/interest-free period. Though expensive, cash payments against cash advances are helpful in situations like medical emergencies and it always helps to take out a currency advance against your credit card balance, rather than bank on a debit card or cutting out a cheque. But any money that you accept through a cash advance will be typically added to your total balance that you owe to the bank and can turn out to be extremely expensive.
This is where a personal loan becomes helpful to reduce costs and get better rates of interest. But though they seem to have a lot of formalities and paperwork and such, getting personal loans for one-self today have become much simplified, with easy availability and even doorstep delivery. Personal loans do take a little bit longer to be approved, including undergoing checks about your employment, eligibility in terms of age and place of residence, plus requiring a suitable guarantor, but there are a lot of reasons why choosing them will prove beneficial to you in the long run.

Cash advance loans will charge you as high as 35 to 50% while personal loans will charge you a maximum of 12 to 30% depending on your eligibility and other criteria. Also, while opting for a cash advance, you are charged non-refundable and compulsory fees in advance as against those of personal loans. This is because, once the bank finds your creditworthiness, they might even waive off your administration and processing fees.
And lastly, the interest rates charged against personal loans remain unchanged throughout the repayment phase, while credit card companies apply low interests initially and begin to raise the bar later on, making you pay higher interest rates while repaying the card balance. This is precisely why personal loans even though traditional are always better to gain better interest rates.

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