Why Never Take Loan from Credit Card but Choose Personal Loan over it in the UAE?

By Sakshi Srivastava - 20 Jan 2022 Last Updated: 19 May 2022
Why Never Take Loan from Credit Card but Choose Personal Loan over it in the UAE?

Personal loans and credit card loans are the greatest options for loans that do not require any security or guarantee. But do you know which of the two is the better option our study further focuses on the fact that Why Never Take a Loan from Credit Card but Choose a Personal Loan over it?

You never know when you'll need money right away. After all, unanticipated expenses can occur at any time. Not everyone has the financial stability to deal with unexpected bills. In such instances, we might seek assistance from a personal loan or a credit card in the UAE. However, keep in mind that you must repay the loan amount plus interest in both circumstances. Although financial gurus frequently advise people to save money for emergencies, few people can afford to do so. When this happens, a credit card or a personal loan can come in handy. It's difficult to choose between a personal loan and credit card because each has advantages and disadvantages.

Personal Loans

A personal loan is an unsecured loan, meaning it doesn't require any security or a guarantor. Weddings, further education, international trips, starting a new business, and even debt consolidation are all examples of personal financial needs that can be met with a personal loan in the UAE. With a 48-month repayment period, the greatest personal finance loan amount is 20 times monthly earnings. In the UAE, criteria such as the applicant's source of income, credit history, age, and job status influence the personal loan interest rate and amount.

If you're ever in need of a large sum of money, a personal loan is a way to go. You might also use a personal loan to consolidate your debts. The personal loan can be repaid in monthly installments. The amount of money to be repaid each month, as well as the interest rate, has already been set. As a result, you won't have to be concerned about rising interest rates or repayment amounts. You will be required to pay a predetermined sum each month. When compared to credit card interest rates, personal loan interest rates are substantially cheaper.

Because of the fixed interest rates and repayment terms, a personal loan may be a better option. The repayment period is usually between 48 and 60 months. In addition, unlike credit cards, personal loans do not allow for minimum monthly payments. The minimal monthly payment is more detrimental than beneficial. It would be a mistake to believe that anyone can get a personal loan easily. That isn't how things work. There are several prerequisites that you must meet in order to be eligible. Furthermore, your debt-to-burden ratio should not exceed the maximum. Customers who take out a personal loan might also enjoy some advantages.

The following are some of the advantages of taking out a personal loan:

  • A longer period of repayment
  • The amount of the fixed monthly repayment
  • No minimum deposit is required for a free credit card account

Credit Card Loans

Because card members have easy access to plastic money, credit cards are commonly used for daily expenses. However, this makes cardholders far more susceptible to overspending. Overspending may result in the use of funds that the cardholder does not have. As a result, they may go into debt. Cardholders can also choose how much of their bill they want to pay back, as long as it does not fall below the minimum.

As long as cardholders pay only the minimum amount due, their outstanding balance will be converted to debt. This outstanding balance will be subject to not just a late fee, but also a rise in interest rates. Increased debt and interest rates will exacerbate your financial situation. The majority of people resort to balance transfer in this situation. Members of credit cards can use balance transfers to pay off their debts with low or no interest rates. However, if you are still unable to repay your debt, a personal loan may be the best option.

When it comes to large sums of debt, though, a personal loan can provide significantly better terms and circumstances. Credit cards are unquestionably the superior option for smaller sums. Credit cards, it's no secret, don't require any proof for lending. Unlike personal loans, they can be used anywhere and at any time. Personal loans require you to pay additional fees in addition to the loan amount. Unlike credit cards, personal loans have processing costs, early settlement fees, and other expenses associated with them. When you only need a small quantity of money, credit cards are a good solution. In the United Arab Emirates, some credit cards provide interest-free periods. The grace period is normally 55 days long. You can easily repay the loan amount without incurring any interest during interest-free periods.

When it comes to large sums of debt, though, a personal loan can provide significantly better terms and circumstances. Credit cards are unquestionably the superior option for smaller sums. Credit cards, it's no secret, don't require any proof for lending. Unlike personal loans, they can be used anywhere and at any time. Personal loans require you to pay additional fees in addition to the loan amount. Unlike credit cards, personal loans have processing costs, early settlement fees, and other expenses associated with them.

Cashbacks, air miles, discounts, and other benefits are offered by credit cards to their cardholders. However, that cannot be the primary reason for using a credit card to obtain a loan. Credit card interest rates rise with rising debt and time, as we all know. A credit card is not a viable option if you believe you will be unable to repay the loan on time. Personal loans, on the other hand, provide customers more time to repay the money. You can also pay back the money on an EMI plan without having to worry about any outstanding balance.

Conclusion

From the above discussion, it is quite clear that both credit card loans and personal loans have their own pros and cons. Further, it is also clear that those who want to opt for small amounts should go for credit card loans and vice versa.

If you are looking for any loan-related services, kindly contact us, we will gladly assist you.

Grow your business with business loan, term loan, capital loan available at attractive interest rates and minimum documentation with no hidden cost with Dhanguard.

By Sakshi Srivastava

20-Jan, 2022

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