#creditcardsvsloans Archives - CredPal

How and When to take a Credit or Loan

CredPal — Mon, 13 Sep 2021 12:54:39 +0000

Let us tell you a story about how you can get credit or a loan without being denied. Fasten your seat belt and get your popcorn!

Meet John, a sound engineer who wanted to get credit or loan but did not know how to make it happen. John got a big deal with a company that needs sound equipment for an event. The company is willing to pay 25% of his fee and balance him 75% when he begins to set up for the event. John is happy that he got such a deal but unhappy because the 25% that was received cannot cover the total expenses to rent the equipment needed for the event.

Studio equipments are very expensive and John needs 500k to rent them. He tried to reach out to his friends but none could help. He thought to take a loan with the assurance that the company is going to pay him his balance on the day of the event. John has one week to the event and he has never taken a loan or a credit before and now he is filled with HOW he can get the loan.

Now, let’s talk about How and When because there might be a John out there who needs this information.

Credit cards and loans are lifesavers when situations call for them as portrayed in the case of John. A lot of people know the concept of credit or loans but they do not know how to go about getting one.

Here are 5 questions you should ask yourself before getting a loan or credit

1. How much do I need?

The first question you need to ask yourself is how much you need. You must have done the necessary calculations so that you do not later regret that the loan you requested was not enough. At CredPal we give out loans from 50,000 Naira up to 5 Million Naira.

2. How long do I have to pay it back?

You have to know how long it is going to take to pay back the loan. For some financial institutions, it takes 1–12 months to spread repayment but for CredPal, you are required to spread repayment within 1 to 12 months for loans, and for credit cards, you pay back all you have spent on your salary date. You cannot spread the repayment.

3. How much will I pay in interest?

You also have to find out about the interest rate of the financial organization you are about to commit to. Interest rates vary for different financial institutions and for CredPal, our loan interest rate is 3.95% to 7% monthly. For example, if John decides to take a loan of the 500 thousand Naira needed from CredPal, he will be paying a 3.95% interest rate on his monthly payment for the period of 9 months.

4. Do I have a good credit score?

This is a factor that determines if your loan will be guaranteed or not. A credit score is a number that depicts a customer’s creditworthiness. You do not have to wait to meet your financial organization before you check your credit score.

5. How soon do I need the funds?

Answering this question will help you find out the urgency of the loan and the financial organization to get it from. If John takes a loan with CredPal. He would be able to get the equipment he needs before the day of the event.

Just like John, taking loans or credit comes when there is an urgent need to meet, and the need cannot be met if you have to save for it. John would probably have to wait for months if he has to save to get the equipment he needs and that could lead to forfeiting the job.

Here are some cases that would require you to get a loan.

1. You do not qualify for a credit card

Some organizations like CredPal only give out credit cards to salary earners so if you are self-employed and you do not qualify for a credit card, you can get a loan.

2. Your credit limit cannot fix your need

CredPal gives you Credit limits that suit your earning capacity. This means that you are given a credit limit that will not stress you to pay back when your salary comes. A loan is advised if you need to make a purchase that exceeds your credit limit.

3. A loan is your least expensive borrowing option

You should get a loan after you have weighed all your options and getting a loan is the least expensive option on your list.

Loans are forms of installment credit. If you are a John and you need a loan for whatever reason, CredPal is here to help you get both your loan and credit card.

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The post How and When to take a Credit or Loan appeared first on CredPal.

Credit cards vs. Personal Loans: The Differences

CredPal — Wed, 08 Sep 2021 19:30:56 +0000

Personal loans and credit cards have been mistaken to serve the same purpose over the years. Although they have the same source, which means you get them from financial institutions like CredPal and you are required to pay them back on a specific date. However, they do not serve the same purpose and have diverse differences.

Let’s start from their definition, a credit card is a small plastic card that you get from financial institutions or lending organizations like CredPal. CredPal funds the credit card with money that you can use for your personal needs and small ticket purchases. Then on a specific date that CredPal has picked for you which is mostly your salary date, you pay back all you have spent on your credit card with very small interest. This means that you cannot spread your repayment.

A personal loan on the other hand provides you with a huge sum of money which you are required to repay in equal installments for a predetermined period. This means that you can spread your repayment within 1–12 months.

You can use a credit card to pay for your personal needs like home repairs, making online purchases, paying for little medical bills, renewing your cable TV subscription, and many more. However, you cannot purchase a car, a plot of land, pay for a kidney transplant, or buy a house with a credit card but you can achieve that with a personal loan. These are items that require a huge sum of money that you can get from financial institutions as a loan and you pay back in installments until you complete your repayment.

When to use a credit card

For smaller payment: A credit card is your pass to making small purchases that will not cost so much to pay back. For example, your favorite IG vendor is running a discount in the middle of the month where you have almost exhausted your salary. What do you do? You pick up your credit card and make the purchase. Have an important professional exam to take but you can’t meet the need at that point? Your credit card is your pass to paying for the fee. All these are small-ticket purchases that you can afford to pay back at once when your salary comes in.
Can pay back in full at the end of the month: Unlike a loan, you cannot spread your repayment. If you can make the purchase and can afford to pay it back in full at the end of the month then you should get a credit card.
For Cashbacks and Discounts: You get rewards such as cash-backs and discounts when you use a CredPal credit card. You get from 200 Naira to as much as 10,000 Naira when you buy from any of our CredPal partner merchants. We have merchants like Slot, Carmart Nigeria, Pointek, TinaSolar Integrated services, Buy better, and many others. Register here to join the CredPal credit card community to enjoy these rewards.

When to use a personal loan.

For large, one-off payment: This is when you should think of taking a loan. When a need comes up and requires a huge sum of money that your salary or credit card cannot afford, a personal loan is a perfect option for you. For example, getting a car to start a ride-hailing business is what a loan can get for you.
For monthly repayments: Some purchases are huge and you can’t afford to pay them all at once. A personal loan gives you the opportunity to get the funds and that way, you can spread your repayment over some time. Unlike a credit card, failure to pay back all you have used at the end of the month affects your credit score.
Lower interest rates: CredPal loans are at the rate of 3.95% monthly. And for a CredPal credit card, the interest differs per plan. We have the 8%, 5%, and 2.5% monthly plans.

As stated above, credit card and loans have their distinct differences. However, there are some similarities.

Credit cards and personal loans are both issued by financial institutions like CredPal.
Getting a personal loan or credit card depends on your creditworthiness and finances. If you have a bad credit score, you most definitely would not get a loan or credit card. If your income cannot pay back the loan you desire, you won’t get the loan and would be given a smaller credit limit.
You can use your credit card or loan to pay for anything you want. And when you do not pay back when you are expected to, it affects your credit score and that can be harmful to you when you need a loan or credit card from other financial organizations.

Whether a credit card or a loan, it is advisable to pay back what you have spent at the allocated time. Whether at the end of the month or in installments within 1–12 months. Failure to do this will affect your credit score and what that means is you become a big risk to financial or lending organizations.

The Goodnews is that CredPal offers both credit cards and loans. You can register to get yours today here.

Also Read: The Balcony Lagos hosts CredPal at restaurant Launch

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The post Credit cards vs. Personal Loans: The Differences appeared first on CredPal.