A credit card allows the cardholder an ability to withdraw cash through an ATM and request for an “on demand” loan from the credit card issuer. A metrobankdirect personal loan on the other hand is a loan applied for by a borrower that may take a few days for approval where approval is dependent on certain criteria.
When is taking a cash advance loan more beneficial than a personal loan and vice versa? Below is a list of points that can be taken into consideration in deciding which between the two is more beneficial.
- Approval Time
Little or no approval is required when making a cash advance loan from a credit card as long as the credit limit or cash advance limit has not been maximized by the cardholder. A personal loan on the other hand takes a few days to process before the loan is granted to the borrower.
- Interest Rates
A credit card has a higher yielding interest rates which can reach up to double the rate of a personal loan. The reason for this the high risk of granting the loan to a cardholder. Unlike a personal loan, the borrower is reviewed of their credit standing prior to being approved of the loan.
- Loan Amount
Loan amount granted by a cash advance loan is dependent on the credit card limit (or a portion of the credit limit). Some factors may affect the loan like the limit an ATM can dispense as there are some banks that limit the transaction amount. This is especially applicable to other countries. A personal loan on the other hand is dependent on the credit score or standing a borrower may have based on the lender’s review of the application. Credit score and standing may even prevent the borrower from being granted a loan.
Based on the information that has been provided, there are cases where a cash advance loan is more beneficial. These are cases where money is required immediately and cannot wait for processing times. But for cases where time is not a factor, getting a personal loan can be advantageous as it yields a much less interest rate.