When you come in need of urgent funds, you either choose a personal loan or a credit card loan. Both options make the urgent funds accessible to you and meet your needs.
If you are confused about choosing the best option between a credit card or a personal loan, then here is a guide for you. If you have short-term debt, then an online credit card loan is the preferred option.
If you want to get a long repayment tenure, then a personal loan is the preferred choice for you. For investment, you should gain brief information about both options by reading this article.
Personal loan VS credit card
A personal loan is provided by a lender on a fixed rate of interest. It is provided in a tenure range between 12 to 60 months payable by EMI that consists of the interest compound and principal.
Personal loan application for salaried individuals has more chances to get approved than self-employed.
On the other hand, a credit card loan is used to resolve the debt. It is because the borrowed amount is dependent on funds that you spend on your card and the balance that remains at the end of the monthly billing cycle.
Pros of credit card
- A credit card is applied for only about the time that you have the requirement for it without any additional documents.
- You are eligible to get a credit card loan if you have a good credit score.
- There is no need to visit the bank to apply for a credit card loan.
Cons of credit card
- The interest rate applicable on Credit cards APR is high.
- Credit cards have come with late fees, annual fees, and over the limit fees.
- Your CIBIL score should be more than 700 and above to apply for a credit card loan.
A personal loan is the best option if you want to take control of your repayment. It is easy to get a personal loan because there are no strict eligibility criteria. The best thing is that you do not need to give your collateral to get a personal loan. In fact, there are different type of personal loan available to choose from that best fits your needs.
Pros of personal loans
- The personal loan eligibility criteria are less strict than credit card loans.
- If you want to consolidate your debt with less interest rate, then personal loans are the best option for you.
- You can easily apply for a personal loan online or offline.
- The loan amount personal loan is disbursed into your account in 30 minutes after you get approval.
Cons of personal loans
- The personal loan interest rate lies between 13 to 36% with additional processing fees, which is higher than credit cards.
- You are limited to the fixed payment schedule in the case of a personal loan.
- Your personal loan application is only approved if you have the proper documentation.
The choice between personal and credit card loans depends on eligibility,funds need repayment abilities, etc. Due to this, some people preferred to take personal loans, whereas some preferred to take credit card loans.