Home renovation can be an expensive project, you can either pay from your account or use your credit card. Very few people think about taking a loan to fund their home improvement. But in reality, a personal loan for home renovation can come as a great help for those who do not want to wait for years to save money and design their home as per the latest trends.
Many people find it difficult to decide whether they should take a loan to fund their home renovation or use their credit card. It seems easier to take credit on your card and use your credit limit to buy materials and pay for the labour, though taking a loan has its own benefits. While both home expansion loans and credit cards can offer a quick flow of money, there are pros and cons of each option. So, before you get ready to borrow, here’s what you must know.
Know About a Home Renovation Loan
A number of people use credit cards these days. You get a credit limit up to which you can spend, and pay it back later with your credit card bills. On the contrary, a home renovation loan is a type of personal loan that you can get from a money lending institution. There are certain formalities that you have to fulfil to apply for this loan and pay it back in equated monthly instalments (EMIs). The terms and conditions of a loan vary from one lender to the other and from one borrower to the other.
A home repair loan works the same way as a personal loan. You have to apply for the loan amount you desire, and the lender approves it based on your credit history, employment, and repayment capacity. As a general rule of thumb, lenders take your credit score as a parameter to check your creditworthiness. The higher the credit score you have, the better chances you stand at getting loan approval. Once you get your loan amount, you can pay it off in EMIs distributed among 12 to 48 months of the loan term.Check your credit score to see if you have a score of at least 700, as most lenders see it as a good score to give you a loan with favourable terms.
There are several features of home renovation loans that you have to look for. You can take a loan of ₹ 1 lakh to ₹ 25 lakhs, depending on your home repair needs. You have 12 to 48 months to repay it in Equated Monthly Instalments (EMIs). Most of these personal loan types are collateral-free, which means you do not need to keep any asset as a security. You don’t need to show any guarantor as well.
Most people think that applying for a loan is lengthy, cumbersome, and time-consuming. But these days, NBFCs like Clix Capital have made the entire process extremely easy and fast. You can have your loan approval within 15 minutes and get your loan amount within 24 hours. The eligibility conditions are extremely simple to meet and documentation requirements are also minimal. The interest rate applied on your home renovation/expansion loan depends on your age, income, loan amount, and other loans you are paying at present.
Pros of Loan
A loan is usually a better option if you have a large, one-off expense like home renovation. People often take out a loan to fund a big purchase, consolidate debt, pay for a home improvement, refinance existing debt, and other such purposes. The biggest advantage of taking a loan is that it usually offers a better interest rate with fixed EMIs. This kind of predictability helps the borrower to build a budget and know the exact date when they will be out of their debt.
You can use your loan amount for any purpose of your choice. The application and approval process are also simple and fast for loans these days. If you have a credit score of over 700, then getting approval would be pretty easy for you.
Pros of Credit Card
Credit cards are better for frequent, smaller expenses that you may repay quickly with your monthly credit card bill.Credit card companies give you a credit limit up to which you can make a purchase. They pay to the seller on your behalf, for which they charge you an interest rate. However, if you pay your credit card bill every month without carrying any balance, you may save yourself from paying any interest.
A credit card is good to use for your daily spending, provided that you have the discipline to stay under your credit limit and pay the full amount with each credit card bill. Some credit card companies even offer rewards and cashback offers to even save some bucks. The best thing is that when you have a credit card in hand, you stay ready for unexpected expenses even if you haven’t built any emergency funds. Just swipe the card and get your money instantly. However, the problem arises when the time to repay it comes.
Choosing Between Home Renovation Loan and Credit Card
Still can’t decide which option is the right for you? Ask yourself these few questions:
- How much amount do you want to borrow?
If it’s a small amount, use your credit card, as it will give you instant money and it will be easier and faster to pay off.
- How long do you need to pay off the debt?
If you don’t have money right now and want a few months to pay off, then a personal loan would be more suitable.
- What is your credit score?
With an excellent score of over 700, you can easily qualify for a home renovation loan with an easy interest rate. You can use a personal loan EMI calculator to know how much your EMIs would be as per your loan amount and loan term.
- Are you in control of your spending habits?
Are you habitual of overspending? If you can’t resist your temptations, then a credit card can leave you in a vicious circle of debts.
As you see now, there’s no one rule to choose between a credit card and a personal loan. Take time, learn about both the options, and choose the best one as per your financial needs.
If you have made up your mind to take out a personal loan for home renovation, then no place can be better than Clix Capital. With an easy application and approval process, you can have your funds in your hands within 24 hours. Just apply for a home renovation loan and get ready to rebuild your home as per your desires.