Financing a New Appliance: Why Loans are Better
posted on Thursday, July 21, 2022 in Financial Tips
Sometimes, you’ll need to be on the market to replace an old appliance and get an upgrade. But often enough, a new appliance can be quite pricey. The two most commonly used options to finance appliances are credit cards and appliance loans. Although you may be inclined to use your credit card, you may want to consider applying for an appliance loan instead.
Benefits of Appliance Loans
Appliance loans are loans used to buy new appliances. Using them can give you some benefits over using your credit card. Here are a few examples:
- Scheduled Monthly Payments - Most of the time, an appliance loan will require you to make monthly payments that can be fixed or variable, depending on the structure of the loan. This makes payments easier to manage for the borrower.
No Collateral – Appliance loans are often unsecured, just like personal loans. This means you wouldn’t need to provide collateral to a private lender or financial institution. Keep in mind that since this is an unsecured loan, chances are that the terms and rates can differ between lenders.
Lower Interest Rates With Higher Borrowing Limits – Depending on the financial institution lending the money and the borrower’s history, this type of loan can have lower interest rates compared to credit cards. Borrowers with a good credit score can even qualify for a higher loan amount. It’s possible to get a loan of $100,000.
Boost Your Credit Score – If the loan is managed properly by the borrower, it can make a big improvement on their credit score. Making payments on time and repaying the full amount based on the loan terms can build a good credit history.
Quick and Easy Access to the Money – Often enough, you won’t have to wait long to get your money when your application has been approved. The funds will be deposited into your account in lump sum. Depending on the lender, you may only wait for as little as 24 hours before you get the money. This makes appliance loans great for emergency appliance purchases.
When To Use a Credit Card or an Appliance Loan
Both of these options are great to use when getting new appliances. However, it all boils down to your needs and financial capacity. If you want to earn rewards and cash-backs and have a revolving credit ready, you may use a credit card.
But if you need financing for a large purchase, a loan is the way to go. Plus, you can have multiple loans consolidated into one single liability, making payments easier.
If you’re looking for personal loans that you can use, contact Community 1st Credit Union. Talk to one of our C1st representatives to learn more about our viable options.