How does a personal loan differ from a credit card in terms of repayment?

Answer

A:

Personal loans and credit cards are both popular ways to borrow money, but they differ significantly in how you repay the borrowed amount. Here’s a comparison focused on repayment terms:

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Personal Loan Repayment:

• Fixed Loan Amount: You borrow a specific sum upfront.

• Fixed Repayment Schedule: You repay the loan in fixed monthly installments over a set period (e.g., 1 to 5 years).

• Fixed or Variable Interest Rate: Interest rates can be fixed or variable, but monthly payments usually remain consistent.

• Predictable Payments: Since installments are fixed, it’s easier to budget.

• Loan Closure: Once all installments are paid, the loan account closes.

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Credit Card Repayment:

• Revolving Credit: You have a credit limit, and you can borrow up to that limit repeatedly as you repay.

• Minimum Monthly Payments: You must pay at least a minimum amount each month, but can pay more or the full balance.

• Variable Interest Rates: Interest is charged on the outstanding balance, often at a higher and variable rate.

• Flexible Payments: Payments vary based on your spending and payment amount.

• Continuous Usage: The account remains open as long as you use and repay the card.

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Summary of Differences:

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How Legal365 Can Help:

• Loan Agreement Review: We help you understand the terms and obligations before borrowing.

• Financial Planning: Guidance on which borrowing option suits your situation best.

• Debt Management: Assistance with repayment plans or restructuring if you face difficulties.

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 Need Expert Advice?

 Visit: www.legals365.com
 Call: +91 9625961599

Advocate B.K. Singh and the Legal365 team are here to guide you on smart borrowing and repayment options.

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