Everybody has lean patches their life when they will be compelled to take a loan and straighten out obligations and expenses until everything falls in place and assumes a normal flow. Unfortunately, a large proportion of people end up relying on credit cards during stressed times because all they need to do is swipe a card and collect cash.

There are hoardings, banners, pop-ups etc. vying for attention to take loans on credit cards and no doubt they may have played a role in the past. But, the paradigms have changed. Especially if people require funds for the short term to tackle temporary problems. Faircent has stepped in to provide an online market platform to borrowers to seek loans from a variety of lenders at a mutually acceptable reduced interest rates in comparison to costly credit card options.

• 1. Faircent Offers Low Interest Rates:

  Firstly, Interest rates charged by credit cards typically hover at 36% because banks and card companies have massive overhead and administrative costs unlike an online P2P platform which is many times cheaper to maintain. High interest costs raise a borrower’s probability of default and leaves a bad mark on credit card users’ CIBIL report leading to further trouble in availing future loans until it becomes a vicious cycle in which everybody stands to lose.

  On the other hand, a peer-2-peer platform like Faircent pass on their savings on operating costs onto the end consumer resulting in cheaper interest rates and easy EMI Payments.  Secondly, irrespective of your credit-worthiness and excellent credit history, the credit card companies will offer same rate of interest as it does to individuals with bad or junk credit history. However, peer-2-peer platforms take credit history into account which leads to substantially lower interest charged to borrowers with good credit history.

• 2. Faircent offers Fixed Interest Rates:

  Unlike a credit card which comes with frequently changing variable interest rates, the loan availed from a P2P platform like Faircent is at a fixed interest rate. Holding a credit card debt with an ever increasing interest rate implies an immense amount of worry and uncertainty apart from implied financial loss.

  Faircent’s fixed and lower interest rate enable the borrower to eventually pay a lesser amount of money during the loan term.

• 3. Faircent offers Fixed Tenure of Loan Repayment:

  The problem with borrowing on a credit card is that it can push the borrower into a debt spiral since people spend a few months repaying the credit card debt and down the line are tempted to re-use the card which leads to further piling up of the debt with increased charges on the card.

  However, at Faircent debt flows in one direction alone. The borrower cannot borrow until all the monthly repayments have been paid in full. This brings better gains financially and mentally for the borrower as it enables them to be debt free at the end of loan tenure.

• 4. Faircent does not charge pre-payment penalties:

  Credit cards charge a pre-payment fee of 3%-5% on loan amount if a borrower wishes to pay off part or entire debt amount, thereby leaving less incentive to actually pay off debt as soon as possible. However, at Faircent, no pre-payment fee is charged and a borrower can repay the entire outstanding amount at any time during the loan period without attracting additional charges. In addition to reasons above, this leads to greater financial discipline among borrowers.

• 5. Debt Consolidation:

  Typically individuals have different credit cards with different amounts and varying interest rates which can lead to missed payments, financial loss and accompanying negative impact on CIBIL score which is a key determinant on availing loan from banks and financial institutions.

  Faircent enables its customers to move all debt in one place (not to forget with a lower interest rate) and smoothly ensure one monthly payment to avoid missed/late payments and accompanying charges. Thus, managing finances become comfortable with no hassles.

  It would be essential to point out that most of us use credit cards and they are mostly chosen as a preferred means to arrange for money immediately. They are good “utility” but they come with a great risk for long term credit or debt consolidation and can push a person into a debt spiral. As substantiated above, peer-to-peer loan is a preferable vehicle to enter into long term borrowing or to consolidate high interest credit borrowing at a reduced interest rate.