Although personal loans are used for many things, they may not be the most optimal option for you in your current situation. Not only that, but they can also be expensive, depending on the lender you choose. For instance, if you have a small business, you are better off applying for a business loan.
That said, there are quite a few loan options you can get if you think personal loans aren’t for you. From credit cards to cash advances, these loan options have their pros and cons, and each of them is suited to a specific situation. Here are some of them.
Credit Card
When you think about it, personal loans and credit cards have their similarities and differences. However, credit cards and personal loans work differently and are more fitted to specific needs and purposes. That said, if you’re planning to make smaller purchases, you’re better off getting a credit card.
They can be used for big ones, but it’s generally not recommended. On the other hand, credit cards are convenient and fast, and they can be potentially much cheaper since some credit card issuers offer their customers points when purchasing something.
So, the more you buy things with your credit card, the more points you’ll get, allowing you to buy more things. At the same time, you can even use your credit card to build your credit score, especially when you’re responsible for your repayments.
So how does it work? Once you use your card to buy something, your card details will be sent back to the bank, and they’ll reduce your available credit based on the item or service you purchased.
Then, at the end of the billing cycle, your credit card issuer will send you a statement that includes all of the purchases you’ve bought in the billing cycle, which you’ll pay. Then they’ll show you your previous balance and new balance that you can use for the next billing cycle.
Line of Credit
A line of credit is some sort of flexible loan. Like a credit card offering a limited credit that you can use however you want, a line of credit is also the same, albeit with revolving credit.
Like a loan, the interest rate will then be applied once you’re approved for a line of credit. But instead of having a set credit or funds, a line of credit works by having a revolving credit that goes back up again every time you pay it back.
Lines of credit are usually much less risky and tend to have a lower interest rate. In functionality, credit cards and lines of credit are the same, but the latter is much cheaper. Lines of credit are typically useful when you expect repeated expenses that you’re sure will exceed a typically given credit on a credit card.
Cash Advance
A cash advance is a short-term loan from your lender or traditional bank. Also, this term applies to the service that credit issuers offer their customers. With a cash advance, you can withdraw a small amount of money against your available credit. However, cash advances are generally expensive due to the urgency.
A good example of this is a credit card cash advance. In this type of cash advance, you’ll be contacting your credit card issuer to apply for a credit card cash advance. The cash that you can get will be based on your available credit.
Typically, the interest rate for credit card cash advances is steep, along with their fees. This option is useful when you’re in an establishment that doesn’t accept credit cards. Additionally, many prefer cash advances to other loans, such as personal loans, since the latter would often require good credit standing.
What separates cash advances from personal loans is how you obtain them. Getting a personal loan can be done online. Whether you’re getting CreditNinja.com’s Houston loans, or loans in California, or any state in the US, your application will be approved after submitting the requirements the lenders ask.
On the other hand, cash advances are obtainable through an ATM or a bank, which is convenient if you’re in a hurry.
Final Words
Personal loans are extremely useful and versatile. However, they can be a big responsibility. That said, if you’re looking for an alternative option, consider trying the loan options listed above. They are easy, reliable, and fast.