When you are making decisions like purchasing your dream vacation or buying that new car, means you have to borrow funds.
There are two great options you can consider to get this done, an installment loan or line of credit.
An installment loan is the right choice for you if you want to borrow a specific amount and repay it with a structured payment plan. You know when the loan will be paid off, and you can also build your credit.
Consider choosing an installment loan if you:
• Want to know exactly when your loan will be paid off and what your interest rate will be
• Want to borrow funds, while building your credit history
• Want to purchase a specific item
You should consider a line of credit when you want flexibility; with a line of credit you will be able to borrow money as you see fit, up to you approved credit limit. The best feature of a line of credit is that you can borrow over and over again without ever having to reapply. Another great feature is that you can pay down as much as you want, or as little as the interest.
Consider choosing a line of credit if you:
• Have a good credit history and have borrowed before
• Want flexibility in your payments
• Need money for ongoing purchases and do not want to reapply every time for a loan.
As you can see from what I have laid out, you have great choices for just about any purchase you want to make.
Let us look at if you wanted to purchase your dream vacation. This type of purchase is more suited for a line of credit, due to the fact that costs can increase at any given moment, especially if you have to buy necessities for the trip.
If you were buying a new car, this type of purchase is best suited for an installment loan, particularly because once you have selected the car, you cannot change it until it is sold. The only thing you can change is the payment frequency, if at all.
I hope this can help you when you are making a decision on whether to get an installment loan or a line of credit.
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