You need to make a large purchase, but paying the whole sum at once is not possible. At this point two paths open up: applying to a bank for a cash loan, or paying in parts with an instalment card. Both have their place, but they differ in terms of cost and flexibility. In this article we compare both options and explain which is more advantageous in which situation.
What is a cash loan?
A cash loan is a loan in which the bank gives you a certain amount at once and you repay it in fixed monthly payments (annuity). The money is transferred to your account and you can spend it wherever you like — whether in a shop or in cash. The interest is set in advance and the payment schedule is clear.
What is an instalment card?
An instalment card, on the other hand, is a card that lets you split a purchase into parts, often interest-free, but only at partner stores. Based on the agreement between the store and the bank, the purchase amount is divided into 3, 6, 12 or more months. The main advantage: interest-free payment within the agreement. The main limitation: it works only at partner stores and is not suitable for cash withdrawal.
The cost difference: which is cheaper?
Looking at the net figures, the difference becomes clear. If there is interest-free instalment at a partner store, the total cost of the purchase stays equal to the price on the tag — there is no additional cost. With a cash loan, interest is added on top of the amount, meaning the total payment for the same item is higher. So if the item you need is sold at an instalment-partner store and interest-free instalment is available, instalment is almost always cheaper.
Comparison in terms of flexibility
- Where it works: a cash loan anywhere, instalment only at partner stores.
- If you need cash: only a cash loan is suitable, you cannot withdraw cash from an instalment card (or only with a high commission).
- Amount: for large amounts a cash loan, for small and medium purchases instalment is more convenient.
- Speed: instalment is arranged immediately at the checkout, a cash loan requires an application and approval.
When to choose which?
| Situation | More suitable option |
|---|---|
| Interest-free instalment at a partner store | Instalment card |
| Cash or a transfer is needed | Cash loan |
| The store is not an instalment partner | Cash loan |
| A large purchase from several different places | Cash loan |
| Small household appliance, phone | Instalment card |
Common mistakes
The most repeated mistake is thinking of an instalment card as "free money." Even if it is interest-free, the obligation to pay each month remains and a late payment creates a fee. The second mistake is piling up several instalments at once and letting the sum of the monthly payments outgrow the budget. The third mistake is taking out a cash loan and spending it on ordinary purchases — spending money that carries interest on goods you could buy with interest-free instalment is pointless.
A strategy for using them together
Often the smartest approach is not to pit the two against each other, but to use each in the right place. Buy everything that can be bought with interest-free instalment at a partner store on instalment, and cover the rest — expenses outside the store network or requiring cash — with a cash loan. This approach minimises the overall interest burden while keeping the flexibility you need.
Conclusion
Because an instalment card is interest-free, it is almost always cheaper for purchases at a partner store, while a cash loan wins where freedom and a large amount are required. Compare both by the total amount you will pay. To calculate cash loan terms and the monthly payment, look at our consumer loan page, and for interest-free instalment options, at our cards page.
