Personal loan vs. Credit Card - Which is betterby sourav Kumar Afinoz
In India, both personal loans and credit cards are popular lending options for individuals looking to borrow money. However, the purpose of these lending instruments or types depends considerably on the basis of the nature of requirement. Before availing a personal loan or an additional line of
credit, you are required to analyse the situation properly and evaluate your overall financial standing and credit situation.
Every now and then, we are in requirement of extra cash to fund some urgent requirement. Swiping a credit card or a personal loan can come to your rescue in such a situation. But, before applying for a credit card or availing a personal loan, let us understand the basics of the two and compare to analyse which one is better?
While both lending options serve the same purpose, they differ when it comes to specific requirements. Let us discuss the difference for you to decide which one will suit you the best:
Taking a loan on credit card is simple. It doesn't require any further documentation as it is a pre-approved unsecured loan. This pre-approved loan is a part of customer’s unutilised credit card limit which is offered as a loan.
Personal loan is an unsecured loan which is provided after taking into consideration the credit history of the customer. It is an unsecured loan and thus not backed by any collateral such as home or car. Availing a personal loan involves some paper work and can be availed only after it is approved and sanctioned.
Due to higher interest rates on credit card loans, it is highly advisable to avail a best personal loan to fulfil your urgent requirement.
Features of a Personal Loan
1. Versatile -
Personal Loan is a versatile type of loan which can be availed to fulfil any personal purpose. You will not be required to disclose the purpose of availing the loan to your bank or financial institution. You can use the personal loan amount for spending on a vacation or renovating a house or buying a
phone or for any other purpose.
A Personal Loan is more affordable than a credit card as the monthly interest on Personal Loan is lesser than that on Credit Cards.
The total process of availing a personal loan is very easy and quick when compared to credit card loan. Personal Loan is hassle-free with no requirement of any asset to be kept as collateral. You may avail of a personal loan ranging from Rs. 50,000 to Rs. 10, 00,000 depending upon your bank and eligibility criteria.
Before applying for a credit card or availing a personal loan, you should carefully evaluate which option is better for you. If you have a small requirement which can be fulfilled with a lesser amount,
then a Credit Card Loan may be availed as it is pre-approved.
However, in cases where the loan amount or requirement is impartially higher or the loan is being
availed for a couple of months – a Personal Loan may turn out to be a better option than a credit
So, before choosing any of these options, you should analyse and choose carefully the pros and cons
of both lending product to decide which one is better for you and take a decision accordingly.
Created on Oct 3rd 2018 07:06. Viewed 573 times.
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