When people need money in a short time, the first thing that comes to their mind is a credit card loan vs personal loan, but the problem is which one to choose. Both have their own advantages, so first of all it has to be decided which loan will be more effective for the borrower.
What is a personal loan?
A personal loan is the name that suggests it can be used for any personal purpose, such as education fees, weddings, medical bills, or home renovation. This type of loan is unsecured, so there is no need for collateral to provide as security. Banks, NBFCs (non-banking financial companies), or other financial institutions offer it. The amount of the loan can vary based on the borrower’s monthly income, CIBIL score, credit history, and other factors.
- Benefits of Personal Loans:
- There is no need to provide assets as collateral for security.
- During the time of disbursement of the loan amount, there is a lump sum amount is given at a time.
- Usually, there are flexible terms and conditions regarding the duration of the repayment of the loan.
- Compared to the credit card loan, the interest rate on personal loans are generally low, which attracts more borrowers.
- There is no restriction on the loan amount to be used for which purpose.
- Features of Personal Loan:
- Loan amounts can be from 20,000 to 40,00,000 depending on borrower’s profile and the lender.
- An individual can get an interest rate ranging from 10% to 24%, which varies depending on the loan providers.
- Processing time for getting a personal loan is 24 to 72 hours.
- Repayment tenure ranges between 1 to 5 years.
- It also provides the option of EMI to repay the loan.
Eligibility for Personal Loan
✅Age : 21 to 60 years
✅Credit Score : Minimum 650 or above
✅Employment Type : Salaried / Self Employed
✅Monthly Income : Minimum 15,000 to 25,000
✅Work Experience : Minimum 6 months to 1 year
Personal Loan : Personal Loan for 15000 Salary – Easy Approval & Low EMI Options
What is a Credit Card Loan ?
This loan can be availed by the credit card holder on the existing credit card limit or above and below the credit limit, it is a pre-approved loan offer for the credit card holder without any additional paperwork or security. Borrowers get this loan based on their repayment history and credit score and the borrower repays these loans in installments along with applicable charges.
Benefit Of Credit Card Loan
- Apply for a credit card loan; there is no paperwork needed for approval and disbursement of loan amount to the cardholder.
- There is no need for documentation due to already information the borrower has to the credit card issuer.
- If the loan is pre-approved, then you don’t have the need to apply for it.
- For repaying credit card loans there is an option to convert repayment into EMIs.
- Due to instant availability of funds, credit card loans are useful for urgent situations.
Features of Credit Card Loan:
- Their loan amount depends on the credit limit of the cardholder and it can go up to 5,00,000 .
- Interest rate is usually 13% to 24% but it varies mostly.
- The period for the repayment of the loan can range between 6 months to 5 years (varies according to lenders).
- In credit card loans, no documents or collateral are required.
- Repayment of credit card loans is made in installments or EMIs.
- Their processing for credit card loans is made immediately for those customers who are pre-approved.
Eligibility for Credit Card Loan
- Must be an existing credit card holder.
- Good credit score and credit repayment history.
- Sufficient credit limit.
Credit Card Loan Vs Personal Loan
| Basis | Personal Loan | Credit Card Loan |
| Loan Amount | 20,000 to 40 lakh | 20,000 to 5 lakh |
| Duration | 1 to 5 years | 6 months to 5 years |
| Disbursal Time | 24 to 72 hours | Instant (if pre-approved) |
| Usage Flexibility | High | High |
| Repayment Method | Monthly EMIs | Monthly EMIs (+ to card bill) |
| Collateral | No | No |
| Loan Type | Unsecured Term Loan | Pre-approved loan on a Credit Card |
| Best For | Planned Large Expenses | Quick Fund in Emergency |
Conclusion
There are benefits to both credit card loan vs personal loan. If you need a loan, you should choose one based on your repayment capacity, how quickly you need it, and how much you need. Before applying, compare interest rates, tenure, and processing fees.
FAQs
What is better for urgent need of money: Credit card debt or personal loan?
The reason depends on you, if you want flexible repayment options with low-interest rates then you should go for a personal loan, but if you need immediate money then you should opt for a credit card loan as it is often pre-approved.
Is credit score requirement mandatory for getting a credit card loan vs personal loan?
Yes, in both the cases, credit score will be considered as an option to check the credibility, but in personal loan, the terms and documentations are a bit longer, and the process is also complicated, so individuals can switch to credit card loans.
