Personal Loan vs Credit Card Loan

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Personal Loan vs Credit Card Loan
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Introduction

• In times of financial emergency, loans always
  come to the rescue.
• For short-term emergencies, personal loans come
  in handy, but not everyone is equally eligible
  for a personal loan. Also, personal loan interest
  rates are quite high which discourages a lot of
  customers.
• At the same time, loan on credit card is also
  gaining popularity in the market because of their
  simple nature and easy approval.

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Personal Loan

• A personal loan can be taken for any personal
  need say medical emergency, wedding expenses,
  vacation, home renovation, studies, buying a car,
  etc.
• Being an unsecured loan, the rate of interest on
  personal loans is naturally on the higher side.
• If you have an excellent credit score and meet
  other eligibility criteria set by the bank, there
  are chances that you could get a reasonable rate
  on loan.

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Common Benefits of a Personal Loan

• Anyone can take loan to meet ones immediate
  individual needs. Banks usually do not put
  restrictions on the end use of the personal loan
  proceeds, except gambling and other speculative
  purposes.
• The application process is easier and quicker as
  compared to secured loans.
• The loan amount can range from a mere Rs 1 Lakh
  and can go up to Rs 50 Lakh.
• The loan amount you will get depends on your
  requirement and repayment capacity.
• The repayment tenure of personal loans usually
  ranges from 1 to 5 years. However, some
  banks/NBFCs also give personal loans for a longer
  tenure say 10 years.
• Though the personal loan is a considered a costly
  borrowing, you can get a reasonable rate of
  interest based on solid credit history and lower
  debt burden on your shoulders.

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Credit Card Loan

• Loan on credit card is much like a personal loan
  in several aspects.
• The loan proceeds can be used to fund a financial
  emergency.
• There is no restriction on the use of money.
• Typically, the bank monitors how you have used
  your credit card over the past few months. If you
  have made a credit card payment on time and
  maintained a good utilization ratio, the bank
  assigns a pre-approved loan amount to you.
• So, if you have already been pre-approved, you
  can easily avail the service, but if not, this
  service may not be of much help during
  emergencies.

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Benefits of Credit Card Loan

• Just like personal loans, credit card loans are
  also unsecured and hence do not require any
  collateral security.
• No additional documentation is required which
  makes the application and approval process easier
  and much faster.
• One can get to pay back the loan in easy EMIs
  over a time period, decided by you.
• One can apply for the loan directly through the
  net banking portal of your credit card provider,
  and within 3-4 working days, you can get the
  amount. Instant disbursal facility is also
  available with some banks.

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Personal Loan vs. Credit Card Loan

•  Personal Loan

• Credit Card Loan

• Eligibility is decided once you apply for the
  loan.
• Loan tenure may range anywhere between 1-5 years,
  sometimes even 10 years.
• No collateral is needed for the loan.
• The loan amount depends on your repayment
  capacity as judged by the bank.
• Borrowers need to submit relevant documents at
  the time of application.

• Usually, only pre-approved customers can apply.
• This loan is mostly given for a shorter tenure
  say up to 3 years.
• Collateral is not needed but your credit card
  limit may get blocked up to the amount of loan.
• The loan amount usually depends on your credit
  card limit.
• No additional documentation is required.

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Personal Loan vs. Credit Card Loan

• A Credit Card Loan amount depends on your credit
  limit, while, A Personal Loan makes more sense
  when you need a larger amount to fund an
  emergency. It is also a great choice if you are
  looking for a loan to consolidate your credit
  card debts.
• On the other hand, loan on credit card can be
  used to fund a smaller need. If you have already
  been pre-approved for a particular amount of
  loan, there is a surety that you will get your
  hands on the money. Credit card loan is much
  quicker to avail than any other type of borrowing
  which makes it quite beneficial during
  emergencies. provider.

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Conclusion

• No matter what type of loan you avail, always do
  your research.
• In case of a personal loan, shop around for a
  lower rate of interest lower processing fee and
  better terms and conditions.
• Though you do not have much negotiation power in
  case of a credit card loan, you can still stay
  informed about what this loan entails.
• Talk to your credit card provider to understand
  the fees and charges and the related terms.
• Financial emergencies come without warning, but
  you should not lose your wit in such
  circumstances. Be a smart borrower and make a
  better choice.

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Thank You !!!