Sally works in a software company as a mobile app tester earning a steady income. When her daughter secured admission to a top B-School in the United States of America, Sally had the savings to cover her daughter’s admission and education fee. She needs additional funds to cover the hostel fee, books and gadgets her daughter needs. Sally consults her friend, a financial advisor who recommends going for a personal loan that Sally can repay in equated monthly instalments. Sally checks the details using a personal loan EMI calculator to understand the implications.
Jim runs a marketing advisory firm clients often need websites and mobile apps. Jim uses the services of freelancers and experts to create these resources. Jim has to pay these experts in advance to negotiate a good deal. As the clients have their fixed payment cycle, Jim often ends in a cash crunch. Jim reached out to a financial advisor who recommended Jim a Line of Credit with a Bank or NBFC to set up a mechanism to manage this working capital requirement.
As in the above examples, a personal loan helps overcome a financial emergency, whereas a line of credit is helpful when there is a recurring financial requirement. A personal loan repayment happens in monthly instalments that stay the same throughout the loan tenure. A line of credit repayment is as per the usage. The borrower needs to repay only for the amount utilised for the specific number of days.
- Balance Transfer
- A Personal loan can transfer the balance of existing credit cards or other personal loans to a single loan. The Personal loan balance transfer helps to make the loan more manageable by combing the loans that help with repayment and tracking easy.
- A personal loan is repaid in equated monthly instalments depending upon the loan tenure and the interest rate. A line of credit is paid only for the amount utilised and the number of days used. Repayment of line of credit can happen any time as per availability of funds.
- A Personal loan meets financial emergencies, mostly one time requirements repaid over time in monthly instalments. A personal loan can meet a medical emergency, personal loan balance transfer, home repair, car repair and wedding expenses. A line of credit covers recurring requirements like a working capital need.
- Interest Rate
- A personal loan comes at a lower interest rate than a line of credit. A line of credit offers more flexibility at a higher interest rate and processing fee. Applicants can use tools like a personal loan EMI calculator to understand the EMI calculations of a personal loan.
- Application Process
- Financial institutions have their laid down process for availing a personal loan or a line of credit. Most lenders nowadays have an online process for loan applications.
What is the easiest way to apply for a Personal loan or a Line of Credit?
Applying for a loan with respective lenders can be a time-consuming process. Moreover, an applicant can never be sure of the best available interest rates. LoansJagat provides the best platform to avail a personal loan or a line of credit. An applicant can fill out a simple form to get loan offers from leading Banks and NBFCs. LoansJagat also provides complete handholding from loan application to loan disbursal.
What is better- a Personal loan or a Line of Credit?
The choice of a personal loan or a line of credit depends upon the usage. As discussed in the above examples, a personal loan is a better choice for one time requirements. A line of credit works better for recurring requirements like vendor payments or working capital requirements.
How to opt for a Personal Loan Balance Transfer?
An applicant can fill the requirements on LoansJagat compare the offers from top Banks and NBFCs. A dedicated loan officer will help in the process to combine the existing liabilities into one personal loan that will make the overall liabilities manageable.