Loan: Personal loan or credit card loan, both of these have their own advantages and some disadvantages.
Are you among those who are in dire need of money now? In such a situation, you can go for taking a personal loan or credit card loan. Both of these have their advantages and some disadvantages. Out of these two loans, you should choose one keeping in mind your need. But which of the two loans would be better for you and what are the advantages and disadvantages of both loans. We are going to give you information about this. Which will help you a lot in choosing what will be good for you before taking a loan.
Personal loan
Personal loan is a multipurpose and unsecured loan, which is given by a bank or non-banking financial company (NBFC) with a fixed rate for a tenure of 12 to 60 months to meet their individual needs. It is given on the basis of key criteria such as income level, credit and employment history, repayment capacity, etc. A salaried person can get a personal loan more easily than a self employed person.
Credit card loan
Credit card loan is a credit lending facility for credit card users that allows the user to take a loan at a fixed credit limit. This means that customers get a loan in the context of an extended credit limit or it can be used as a loan amount. After the approval of the loan, the limit of the card is increased to that limit. However, banks charge a higher rate of interest on it.
These are the differences between credit and personal loans
– If you want to take a personal loan, then you will have to submit your documents and complete the verification process. But in case of credit card loan, you do not need to submit any documents because the credit card you have has all the necessary information.
– You can apply to take a personal loan from any bank, but you can take a loan on a credit card from the same bank from which you have taken a credit card.
– Credit card loan can be taken only up to the limit of credit card, while you can also borrow large amount with the help of personal loan.
– Personal loan term is longer than credit card loan. You can take a personal loan for a maximum of 5 years. At the same time, the maximum period of loan taken with credit card can be up to 24 months.
Personal loans are taken for many purposes, such as medical expenses, children’s education, marriage, renovation of the house, etc. Whereas credit card loans are generally taken for small and long term purchases for small and big business or personal needs.
– The common thing in both is that both are an unsecured loan, so you do not need to pledge any of your assets in it.
Generally, personal loans come with 8.45-36% interest rate, whereas credit card loans come with 0-35% interest rate depending on different situations. However, another important factor is that credit card loans can be availed at flat interest rates, while personal loans are available with lowering the remaining rates.
Identifying the right credit option is based on one’s financial situation and needs. In such a situation, if you need a small amount for a short period, then you can go for a credit card loan. On the other hand, you can also opt for a personal loan if you need a large amount of money for a long time.
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