Today’s working professionals face financial problems in their daily lives. Making wise decisions can help people manage their financial problems.
This blog explains why salaried employees should consider a personal loan rather than relying only on credit cards.
What is a credit card?
Credit is a financial tool issued by banks and other financial institutions that allows cardholders to borrow money and use it to purchase similar goods and services from shops that accept cards. However, the borrowed money has to be repaid within the time specified, with added interest and other agreed-upon charges, either in whole or over time
What is a personal loan?
Personal loans are unsecured loans. It allows you to borrow money without collateral, and the borrowed money can be used for a variety of purposes, such as trip planning, business, or a dream wedding.
However, the borrowed funds must be repaid with additional interest on a monthly or yearly basis. Since your loan is unsecured, the lender will not seize your assets if you default on your payments. Defaulting on payments can harm your credit score.
Why a salaried employee should consider taking a personal loan?
In today’s world, as technology advances, banks and financial institutions provide customers with easy borrowing options. Banks and other finance companies, such as Zap Money, provide immediate personal loans to working individuals.
Getting money online has become simple in banks and finance companies, particularly for paid individuals. There are numerous benefits to taking out a personal loan as a salaried job.
Benefits of taking personal loan for salaried people:
1. Process for Documentation That is Easy:
Obtaining a personal loan for salaried individuals is simple, and the entire process can be completed online. it requires minimal documentation, and the process can be completed quickly.
2. Good Interest Rates:
Lower interest rates are possible for salaried individuals as well as those with a strong credit score. Banks and other financial organizations, such as Zap Money, offer decent interest rates in comparison to credit cards.
3. Medical Emergencies:
Unexpected situations, such as a medical emergency, can make it difficult to secure money. Personal loans are the sole choice to help you out of financial problems, since you get an liquid cash which you can spend anywhere compared to credit cards.
4. Travel Expenses:
People generally plan to go to new places or take a well-deserved holiday, but they cannot do so due to a lack of cash. However, it is possible to visit your dream destination by taking a personal loan for travel with lower interest rate compared to credit cards.
5. Loan Repayment Option:
Personal loans provide flexible repayment options based on your financial capability. you can repay your loan in 15 months or just three months.
Simply make sure that you have enough funds in your bank account when the repayment date approaches, as skipping an EMI payment may hurt your credit score. A credit card is useful, only if you can pay the entire due within a month
Advantages of getting a personal loan from Zap Money instead of a credit card:
| Zap Money Personal Loan | Credit Card | ||
| Impact on Credit Score | Constant repayment improves credit score slowly | Personal loan repayment greatly improves credit score | |
| Loan/Credit Amount | The loan amount credited to bank account can be withdrawn as liquid cash | – | |
| Withdrawal of Liquid Cash | No additional charges | Cannot withdraw liquid cash | |
| Policy and Charges | 100% Transparent loan policy, No pre-closure charges | Hidden charges and penalties for pre-closure might be present | |
| Approval/Issuance Time | Personal loan approval within 4 hrs for most cases | Average turnaround time for issuing a credit card is 3 days | |
| Interest Rate | Personal loan interest rate starts from 18% per annum | Most credit cards charge more than 36% pa interest rate | |
| Data Protection | Safety data protection | – | |
FAQ:
Who is eligible for a personal loan?
An individual who meets the lender’s eligibility requirements, such as credit score, age, and employment details, is eligible for a personal loan.
Do personal loans depend on salary?
Most loan amounts are determined not just by salary, but also by payment history, credit score, and various other factors.
What are the advantages of a personal loan?
A personal loan can cover your urgent financial needs such as travel expenses, emergency funding, business renovation, etc.
Why is a personal loan better compared to a credit card?
Personal offers low-interest rates for people with good credit scores and can be used it various purposes
What is the difference between a personal loan and a credit card?
Personal loans have low-interest rates and long repayment methods, whereas credit cards have higher interest rates and short repayment periods.
When you should consider a personal loan instead of a credit card?
If you need big amounts to pay your financial requirements, personal loans are a better option.
Personal loan vs Credit card, which is better for EMI ?
If you fail to make your monthly credit card payments on time, you may face significant interest charges. In contrast, a personal loan allows you to make monthly payments over a long period of time.
