Credit is a crucial component of our financial lives in the modern world. It enables us to purchase items like homes, vehicles, and other things that we might not be able to afford otherwise. Although credit cards are more and more popular, they have their own set of risks and disadvantages. One alternative to using credit cards is to borrow from a licensed money lender. The benefits of borrowing from a registered money lender as opposed to using a credit card will be covered in this article.
Lower Interest Rates
One of the numerous advantages of being able to borrow money from a licensed moneylender is that their interest rates are typically less expensive than those of credit cards. Credit cards can have interest rates of 20% or more, whereas registered money lenders normally charge 4% to 10%. By borrowing from a licensed money lender, you can save a significant amount of money on interest charges.
Fixed Repayment Schedule
When you borrow from a licensed money lender, you will have a fixed repayment schedule. You will be able to determine how much you must pay each month and when your loan will be completely repaid as a result. In contrast, credit cards typically have a minimum payment that varies each month, making it difficult to plan your finances.
No Hidden Fees
Annual fees, balance transfer fees, and late payment fees are common hidden costs associated with credit cards. These costs can quickly build up and make it challenging to manage your money. When you borrow from a licensed money lender, you will know exactly what fees are involved upfront, making it easier to plan your finances.
Better Credit Score Management
Borrowing from a licensed money lender can also help you manage your credit score better. You can make regular payments that will raise your credit score if you have a set payback schedule. In contrast, credit cards can negatively impact your credit score if you carry a balance for too long or miss payments.
Licensed money lenders often provide personalized service to their borrowers. They will collaborate with you to comprehend your financial condition and identify the loan that best suits your requirements. Credit card firms, on the other hand, are more concerned with turning a profit and might not be looking out for your best interests.
Access to Higher Loan Amounts
Licensed money lenders often offer higher loan amounts than credit cards. This might be especially helpful if you need to borrow a sizable sum of money to pay for an expensive project or buy. Additionally, authorized money lenders might be more accommodating with the loan terms and repayment plans, letting you tailor the loan to suit your requirements.
Faster Processing Time
A licensed moneylender’s loan approval process is frequently quicker than applying for a credit card. The application process is usually straightforward, and you can often receive the funds within a few days of approval. This can be especially beneficial if you need the funds quickly to pay for an unexpected expense.
No Impact on Credit Utilization Ratio
Your credit utilization ratio, which calculates how much of your available credit is actually being used, may be negatively impacted by using a credit card. High credit card debt might harm your credit rating even if you regularly make your payments on time. When you borrow from a licensed money lender, the loan does not impact your credit utilization ratio, which can help protect your credit score.
Less Risk of Overspending
Credit cards can make it easy to overspend and accumulate debt. You may avoid overpaying and taking on more debt than you can handle by working with a qualified money lender, who will provide you a predetermined loan amount and payback schedule.
Borrowing from a licensed money lender instead of using credit cards has many advantages. You can save money on interest charges, have a fixed repayment schedule, avoid hidden fees, manage your credit score better, and receive personalized service. If you need to access credit, consider working with a licensed money lender to meet your financial needs.