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Loans Or Credits, How Do You Know What Is Best For You

You need extra money to achieve some of your goals, but you don’t know how to choose between all the offers that financial institutions offer. Here we tell you if a loan or a credit is better for you.

Although they are sometimes used interchangeably, it must be clarified that a loan and a credit are not the same .

The main difference is that for the first, a defined amount is granted from the beginning, on which interest is generated and must be repaid within a stipulated period, such as a loan to buy a car or a house.

In the case of the second, it is a line of credit that can be accessed over and over again, as long as the limit is not reached and there is some amount available, that is, like a credit card.

Pros Or Cons Of Loans

Although choosing between one and the other depends a lot on your goals , knowing the advantages and disadvantages of loans can help you decide:

The main advantage is that you can have funds in a single transaction.

They are generally greater amounts than those granted by credit cards.

The interests are usually lower than those offered by the cards.

The monthly payment is the same throughout the entire loan, so you will know how much you must pay each time.

Against they have that they can charge commissions for opening.

Another disadvantage is that depending on the type of loan, in some you must pay additional insurance, such as the car or unemployment.

In addition, whether you make use of it or not, you must return the amount borrowed along with the interest.

Some loans charge penalties for prompt payment.

And The Credits?

Regarding the credits, you can also find some things for and against:

The first advantage is that as long as you have available balance, you can use it as many times as you want.

The amount you can access increases over time if you make good use of it.

The money is available for you to use when you need it, as long as you don’t have to pay interest on it.

One disadvantage is that some cards charge annuity and you must pay it even if you have never used it.

The amounts to be paid monthly vary depending on what you have bought.

If you limit yourself to paying only the minimum, the interests can increase exorbitantly and the cost of the credit would be much higher for you, in this case.

So You Can Know Which One Suits You

Choosing between one and the other depends on what your goals are when applying for financing.

If what you are looking for is to cover a more or less high amount, a loan could be the solution, because you would also pay less interest.

On the contrary, if what you are looking for is to have money available from time to time for minor purchases, then a loan would be the solution.

The most important thing is that you compare the interest that you must pay with each one, what is the term and the monthly payments that you must cover. In this way you will avoid requesting more money than you can pay .

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