When you are in some sort of bad financial condition, you need money fast. That’s why; applying for a loan as quickly as possible always remains your top priority. Both personal loans and cash advances are there to bail you out from any type of financial loss. But note that both of them have their respective pros and cons.
A personal loan is typically an unsecured loan taken for various purposes. From medical reasons to paying your bills, personal loans fulfil a wide variety of objectives. The rate of interest charged on personal loans is pretty high as they are unsecured loans. However, instant cash loans are different from personal loans.
The Working Mechanism of Personal Loans
A personal loan is a type of instalment loan. In other words, you will borrow a specific amount of money only to pay it back in fixed monthly payments for a particular time period. Personal loans are unsecured, implying that you don’t have to provide collateral. A majority of lenders will rely on your credit score to determine your eligibility and interest rates. If your score is higher than 600, you will get a personal loan with the lowest interest rates.
Working Mechanism of Cash Advance
Cash advance, also known as a credit card cash advance loan, is a short-term loan provided by your credit card company. Right on your credit card statement, you will find your cash advance limit. But note that the cash advance limit will always be smaller than your credit card’s limit.
In a cash advance loan, you have to pay the credit card cash advance fees along with interest. To be precise, the car issuers charge an initial fee, often 3% to 5% of the cash advance amount. Always remember that the interest rates on cash advances are often higher than the interest rate of the card in purchases. In most cases, your credit card company will start charging interest as soon as you take out a cash advance.
Choosing a Personal Loan and Cash Advance Loan
Always remember that the decision of selecting a personal loan and cash advance loan depends on various factors. Here are some conditions where you should always opt for a personal loan.
. Good Credit Score
If you have good credit scores, then always opt for a personal loan. You will be eligible for a personal loan with lower interest rates.
. You don’t have a Credit Card
Personal loans are pretty flexible, and you should opt for them in the absence of a credit card. There are high costs associated with a cash advance loan.
On the other hand, a cash advance loan is best when:
. It would be best if you had Immediate Cash
If you need immediate cash, always go for a quick loans.
. You will pay off the Loan Quickly
If you can pay off the cash advance in a few weeks by avoiding interest, then always opt for the cash advance loans.
Let’s hope the difference between personal loans and cash advance loans is now clear to you.