by Arielle Bental
If you are anything like us, you probably have some future goals in mind. Whether that means buying a house, a car, a ring, saving for college or even just saving for a child. These are all considered big purchases, which all require a lot of consideration and planning. That’s why we want to help you make the best possible decisions leading up to that large purchase! One of the key things to remember before making a large purchase is what type of payment you will be using. The two main types of payments are loans and credit. Both are great, but they could vary depending on your needs.
There are LARGE differences between the two. Credit and loans will be beneficial but it is important to do yo research to find out what's best for you! We have a few pros and cons to share with you that can help make this whole adulting thing a little easier:
1.Loans:
A loan, unlike credit, involves a certain amount of money and no more. You take a set amount, you repay it in fixed monthly installments over time. Once you get approved for a loan, you receive the entire amount of the loan in the beginning, you use the money, and you are then expected to pay back the money you used plus interest until it is repaid back into the full amount.
Pros:
- You get the exact amount you need.
- You know how much you need to pay back.
- You have time.
Cons:
- Harder to be approved.
- You cannot add more money if you need more.
- You have to pay interest.
2. Credit:
Using credit, you have a line of available credit that you can tap into at any time. Depending on your credit limit, you can buy a lot without having actual available cash. You can use your credit card to buy the purchase, and you then pay the lender back when your bill comes the following month. You will then get charged interest until you pay back your purchase!
Pros:
- You have a lot of flexibility in the amount of money you can spend.
- You only have to pay interest if you have an outstanding balance and have not paid it.
- Easier to use and you don’t need to be approved.
Cons:
- The ability to overspend and have debt.
- High-interest rates especially if you forget to pay your bill on time.
- Could have negative effects on your credit score (well talk about this later)
Ultimately, they are both solid options when planning for your future! Just make sure to weigh the benefits of each before you can fully decide on what you’ll be using for that big purchase of yours! We hope this could help, and stay tuned for how to raise your credit score!
xo- Qoins
