You should not only wonder what the differences are, but especially what the similarities are between these two types of credit. After all, at first glance you might think that it is the same product and sometimes you could confuse them with each other.
Smooth and free to use … you don’t have to justify yourself!
When you analyze the sites of banks and credit institutions, you will find that their flexible use is the most important thing these two credit formulas have in common. As a borrower, you can use the sum that is made available to you whenever you want and for what you want, without having to justify yourself.
Higher APR than APR for specific credit
This flexible use has a price because the annual percentage rate of charge (APR) for a personal loan or a money reserve is much higher than the APR for loans with a specific purpose (renovation, purchase of a car,…).
Up to twice the APR!
The fact that with a money reserve you can always have the money that you have already repaid, without having to make a new application or submit a file, has a cost. The APR can therefore amount to double the APR for a personal loan!
Big difference between the levels of the amounts lent
The fact that with a money reserve you can always have the money that you have already repaid, implies that the amounts that are lent out are smaller than the amounts for personal loans. For example, you can already find offers for money reserves from $ 500 to $ 10,000 to $ 15,000. The amounts can rise to $ 50,000 for personal loans.
Everything is fixed in one formula, nothing in the other!
With a personal loan, you know exactly when and when you sign the contract:
- The date and amount deposited into your account
- The duration of the repayment and thus the number of humanities, their due dates, their amount with the division between repaid capital and interest
- The possible file costs
- Your options for outstanding balance insurance
- The applied borrowing rate and the APR, which allows to compare two credits because it takes into account the borrowing rate and the file costs
So you know the amortization table with fixed humanities, regardless of whether you withdraw the amount at once or in different times.
If you spread the use of your credit over a long period, you will pay interest on the borrowed money that you do not use, which is not optimal.
With a money reserve, on the other hand, you don’t pay anything as long as you don’t use the money, but you don’t know how much you will have to pay back. With systematic withdrawal and repayment, it is very complicated to understand exactly what you are repaying.
Early repayment WITH and WITHOUT a fine
One of the benefits of a cash reserve is that you can make early repayments without any kind of penalty. That makes sense because the credit institution has an interest in drawing on your money reserve as soon as possible so that it can charge interest.
How do you choose between a money reserve and a personal loan?
Do you need a lot or little money? Do you need it all right away? How often do you need it? The answer to these questions will determine whether you should opt for a cash reserve or a personal loan. In both cases, we remind you that you can save by making and comparing simulations . On our site it is very simple: money reserve & personal loan.