So, while choosing between a credit card loan and a personal loan, your choice depends on your requirement and how you intend to use the money. Whether you need cash to pay for a certain emergency or a card to pay for one of your urgent purchases, you would need funds disbursed in your bank account or a credit card with a limit to pay for your purchase.
Instant personal loan and credit card loan
Both instant personal loans and credit card loans are financial tools to help you get funds in critical times. Both the means are collateral-free and not limiting end-use, i.e., the funds can be used anywhere.
Using a credit card, you just have to swipe to avail yourself of its benefits which is utterly different from the traditional lending process. An Instant personal loan is an advanced form of a personal loan using which you can borrow money online with a few clicks on your computer or smartphone.
Both options are convenient when you need to borrow money, and both have lots of benefits. But choosing one from the other depends on your affordability and requirements, among other factors.
Comparison between features of personal loan and credit card loan
To select one of these two loan options, you need to differentiate between them well and choose an option that is best suitable for you. You need to draw a comparison between the two based on your situation and needs.
To select the loan option best suitable for you, you have to understand the features of both the loan products. Below is the list of features highlighting both instant loans and credit cards to make a comparison between them easy for you.
Features you get with instant loans and credit cards
Take a look at some of the features which comes with instant loans and credit cards.
In credit cards, there is no fixed tenure period set. You can borrow and make repayment any number of times as long as you deal within your credit limit. However, for an instant personal loan, the loan tenure period can range from a year to a maximum of five years.
With a credit card loan, there is a credit limit that is equivalent to the loan amount. You, as a cardholder, can use funds without any restriction within that limit. Again, the interest is charged only on the amount of money used by you.
However, for instant personal loans, the story is different. You get the credit limit based on your credit score, financial background, and salary slips. You are free to withdraw any amount you desire for a tenure of 1 year to 5 years.
Getting a credit card does not require much documentation. If you are availing of a credit card from a bank where you are an existing customer, no documentation is required.
However, instant personal loans require essential documentation like your address proof, ID card, and latest payslips. Even when documents are required with instant personal loans, the process of submitting them is entirely online. And so, no physical documentation is required. You can upload the documents at your lender’s portal or instant personal loan app.
No security required
Credit card loans and instant personal loans are unsecured and require no collateral or security at any stage of getting loans. However, the terms and conditions for both instant loans and credit cards in case of delayed payments and non-repayment are a bit different from conventional personal loans.
You must sign the loan agreement for both the loan products only post understanding the fine prints in detail.
Rate of interest
Rate of interest is arguably the most crucial factor that cannot be ignored at any cost when it comes to loaning money. You have to know the interest charged on your borrowing as it is the single most critical factor you must consider while availing of any loan, whether it is a credit card or an instant personal loan.
Typically, an instant personal loan is offered at a 10% to 24% interest rate. The rate of interest provided to you depends on your financial profile.
However, loaning money using a credit card can cost you much more. The interest rate charged on using a credit card is from 16% to 32% as per the provider. Nevertheless, you can avail many offers using credit cards. So, to get extra benefits, you can avail credit card loan in the offer period. You may get the card at a flat interest rate.
Thus, a credit card loan is a bit different kind of loan as compared to personal loans. An instant personal loan works similar to a traditional personal loan, with the only difference being the online processes. You are eligible to get a loan amount as per your repayment capacity from an instant personal loan app.
If you have been taking loans regularly, the loan amount you can get with instant personal loans can be much more as compared to the credit limit on your credit card. Thus, it is safe to say that instant personal loan trumps credit card loan every single time.
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs