The Top 3 Benefits Of Choosing An Installment Loan Over Using A Credit Card
If you are in need of some extra cash to catch up on bills, finance a vacation, or complete a home improvement project, you may be tempted to simply put these expenses on a credit card. While there can be some benefits to utilizing credit cards, there are also some rather significant disadvantages to using credit cards to finance these types of purchases. Thankfully, there is a better option. This option is to obtain a personal installment loan. Continue reading to learn more about the top three reasons why choosing installment loans is the better option.
#1: Installment Loans Offer Access To Larger Amounts
Since credit cards are designed to help people finance everyday purchases or to help in an emergency, these lines of credit are often on the smaller side. While a small line of credit may be sufficient in some situations, there will be times when you find yourself needing more money than a credit card can provide. In these situations, installment loans can allow you to gain access to the larger amount of funds that you require.
#2: An Installment Loan Can Actually Improve Your Credit
If you put a large purchase on your credit card, your credit utilization score will increase. This will actually cause your credit score to go down and can impact your ability to borrow more money until your credit card debt has been paid. Installment loans are a different type of financial product and therefore help to diversify your credit profile. Having multiple types of accounts in good standing on your credit report can help to increase your score and your overall credit worthiness.
#3: A Personal Installment Loan Often Has Much Lower Interest Rates
Even with a good credit score, you are likely to find that your credit cards come with some pretty hefty interest rates if you are unable to pay your balance in full each month. This can greatly increase how much you pay in the long run for the things you choose to purchase using your credit cards. While personal installment loans also come with interest, the interest rates associated with these loans are traditionally much lower than those associated with credit cards. What this means for you is that you will pay less to borrow the money you need. This can make borrowing money far more affordable and decrease your risk of falling behind on your loan payments.
Contact a local loan service, such as Ardmore Finance, for more information.