Uncertainties in life are often unexpected, and some people may seek financial help to address the challenges. In such stressful times, having an immediate source of credit might be a lifesaver, especially if it’s a medical emergency.
When you need fast access to a line of credit to meet your financial obligations like a good credit score or you have to meet the slice credit card eligibility, personal loans can be your best buddy. Let’s take a closer look at what an instant personal loan comprises and how it differs from other types of short-term credit, such as a credit card loan.
WHAT IS A PERSONAL LOAN?
A personal loan is an unsecured loan that people take to meet immediate and important financial commitments. Because personal loans are unsecured, the borrowers do not have to provide any sort of security or collateral. An instant personal loan is, therefore, more profitable than any other sort of credit that requires security. In the case of a personal loan, there are no constraints on how the funds will be spent.
It can be used for a variety of purposes, including studying, traveling, marriage, home renovation, shopping, etc. A personal loan provides tremendous flexibility. Many reputable financial organizations, such as Home Credit India, provide instant personal loans to borrowers who have a specific purpose in mind when applying for a personal loan.
WHAT IS A CREDIT CARD LOAN?
Borrowers in need can also take advantage of credit card loans, which provide a simple and rapid source of credit. They are pre-approved loans that don’t require any additional verification and are only available to people who have a credit card. The loan amount is determined by the borrower’s credit card limit. It’s also one of the quickest ways to get an unsecured loan that you can use for a variety of things.
Most credit card users have unused credit, which is often provided to them as a loan. A credit card loan is sometimes confused with a cash withdrawal. It’s vital to distinguish between a credit card loan and a credit card cash withdrawal. Different credit card issuers have different regulations when it comes to cash withdrawals.
PERSONAL LOAN VS CREDIT CARD LOAN
Now that we have a good understanding of the differences between a personal loan and a credit card loan, let’s compare them.
Documentation Requirements
Only a few important documents are required for a personal loan application, including a PAN card, proof of identity, and proof of income. Depending on the lender’s policies, this may or may not be the case. A credit card loan, on the other hand, does not necessitate the submission of any additional documentation. Because the lending party is providing a loan to a registered consumer, no further information is required, and the loan is processed faster.
However, reputable non-banking financial firms such as Home Credit India offer an instant personal loan that can be approved instantly and get disbursed in just a few hours.
Interest Rates
Personal loan interest rates vary depending on your lenders and financial organizations. The personal loan interest rate varies based on the lending company and the borrower’s credit profile. However, applicants with good credit scores can easily qualify for a personal loan with a lower interest rate.
Loan Repayment Tenure
If you want a loan with longer-term and more flexible repayment options, a personal loan is the way to go. Personal loans are available for a longer period of time. Credit card loans, on the other hand, have a shorter repayment period and it can be difficult to keep up with the high EMIs over time.
Total Loan Amount
Personal loans typically have a higher loan amount and can be used to satisfy even larger financial responsibilities, such as studying abroad, getting married, and so on. Personal loans allow you to borrow a substantial sum of money. A personal loan from Home Credit might be worth up to 5 Lakhs. Credit card loans have a lower overall loan amount and are also dependent on the borrower’s credit card limit. It’s suitable for meeting a smaller financial commitment.
It’s worth noting that personal loans and credit card loans are both unsecured. You don’t have to put up any assets as collateral for the loan, and you can use it as you choose.
MAJOR ADVANTAGES OF A PERSONAL LOAN
After weighing the pros and cons of a personal loan vs. a credit card loan, you must have a good sense of which is best for you. Personal loans are often an excellent choice if you need a larger loan amount with a longer repayment time.
Because you can easily plan and repay the loan amount through EMIs, the risk of default is reduced. Everyone may not be qualified for a credit card and, as a result, may not be able to obtain a credit card loan.
Even with a poor credit history and a low salary, most people may get a personal loan. The amount granted may vary, but securing a personal loan is simple. Here are some of the most significant benefits of an instant personal loan.
- When opposed to credit card loans, personal loan eligibility criteria are less demanding and require less paperwork.
- A personal loan is an excellent strategy to consolidate debt at a low rate of interest.
- People can get an instant personal loan online from the comfort of their own homes, thanks to firms like Home Credit India.
- Personal Loan offers quick disbursal of funds and can be used for time-sensitive financial emergencies.
- A personal loan can be used for a variety of purposes and has no restrictions.
So in both the cases, you need to have a good credit score or you will have to understand how to improve cibil score before applying for credit card or a personal loan
