In the need of some liquid money? You can choose either a personal loan or a credit card loan. They both can be good and being the personal loan available online and credit card being in your hands, neither of them is a bad choice to meet any financial need. Also, you can get a personal loan to pay the credit card bill and vis-a-versa too. But, which option is better at what time and for whom is something that can make one of these options preferable for you to the other one at times.
You can understand all the details about a personal loan as well as a credit card loan and reach a decision that best suits you by knowing the detailed features that a personal loan and a credit card loan have.
Multipurpose loan: There is no bar on the purpose for which you can have a personal loan. It can be taken for any need. Though there is a special-purpose loan available in the market like an education loan, a car loan, or a home loan, there are many needs that remain uncovered under such loans.
To make up for all that including the special purposes, a personal loan can be taken. Whether it’s a medical emergency, a holiday plan, home renovation, debt consolidation, need a push for your finances, car repair or modification, or any need; you name it and a personal loan can be taken for that.
Anytime, Anywhere: With the personal loan being available online you can get one from absolutely anywhere. The online facility also makes the loan 24*7 available, which is always very helpful especially in an emergency. As you can get the loan online, you don’t have to waste your time visiting the lender to fill the lengthy application and submit a lot of documents requested by them.
Shopping for the best loan deals: Back in the old days getting a personal loan has been taboo among people. Lengthy documentation, discussion with the lender, unclear loaning terms, and heavy rates of interest could have been the reason behind it.
But now, with many things brought to change and lenders having their presence on the digital platform, getting a personal loan has turned to be an easy ride. You can compare which will be the best platform for you to get a loan, like whether you want to take a loan from a bank, an NBFC, or some digital lender. Again, you can compare and negotiate with them to reach a customized loan deal that suits your pocket.
Features of a credit card loan
Pre-approved: The credit card is a facility that comes with a limit to be used. And on the unused credit limit, the loan on a credit card is given. That means you don’t have to provide any income certificate to get this loan. It is pre-approved and you can take it online in minutes. Not just the websites but many lenders have an app too, which makes the credit loan just a few clicks away from you.
Zero documents loan: On the credit card loan, absolutely no documents are taken by the lender. At the time of taking a personal loan, you may need to give a few documents like your ID proof, residential proof, income certificate, or bank statement, etc. but that is only for the approval of the credit card. While you are taking a loan against it you don’t have to give any papers or proofs. This makes the loan a preferred option in an emergency or a short-term need.
No collateral loan: The credit card loan is an unsecured loan option and for getting this you don’t have to keep anything as a security or collateral. The credit limit is approved based on your payback capacity and you can easily access that limit without anything to give against it. This makes the loan an easy and fast option at a time of some urgency.
A personal loan is no more a traditional loaning system. It is easily available online. You can get a loan in just a few steps. There will not be any hidden charges on the loan. When it comes to a credit card loan, lenders generally have extra charges, which will be a burden to you.
The rates of interest on a personal loan are comparatively lower than the credit card loan. A credit card loan can be the easiest and the fastest loan but generally, it has higher rates. In contrast, with a personal loan online, the rates are kept genuine and you can negotiate for a pocket-friendly rate. The interest also does not raise exponentially on a personal loan if you increase the sum borrowed but in a credit card loan, it works like, the higher the sum the higher the interest payable.
The credit card loan is not given for a big sum while the personal loan can be taken for higher amounts as well. Depending upon the income and payback capacity the credit limit on your card can be higher but that raises the eligibility for a personal loan as well. In any case, an individual can have a personal loan for a higher sum than a credit card loan.
The payback procedure of both loans is similar. You can choose a monthly payback option in both. With a credit card you can make bulk payments as well that helps in covering up the loan faster which is required as well because of the interest accumulation it has. In the case of a personal loan, there are many lenders like FlexSalary that offer “Repay-anytime” service on their loans, through which without having to pay any prepayment charges, you can pay off your loan faster in uneven payments.
After the prepayment, comes the late payment charges. Though there may be no prepayment charges, there will be a very high late payment fee imposed on a credit card loan. In just one late installment the due can rise unexpectedly causing the payable sum to go higher and higher. In a personal loan as well the late payment fee is taken but it is not so very high.
There are options available where you can pay off just the minimum due every month and save from any additional charges. This may happen in a credit card loan as well but that does not save from heavy interest accumulation whereas in a personal loan the rest remains constant.
The credit card is a preapproved credit tool, but now a personal loan can also be pre-qualified. With any lender, you can have this sanctioned for up to a year and then it can be used with other lenders as well. While, in a credit card loan, whichever lender gives you the credit card, only that can give you the loan over it. This puts a constraint on availing the benefit from another lender. Suppose if a new lender named XYZ gives you a lesser rate of interest then you can’t get benefitted from it. In case of pre-qualified personal loan eligibility, you can have this benefit.
On a personal loan, you can have a longer repayment time whereas in a credit card loan the tenure can’t be extended much. A personal loan can be taken for approx 60 months while a credit card loan has to be repaid within 12 months usually.
The eligibility criteria of a personal loan are less stringent than a credit card loan. Any individual with any background can apply for a personal loan very easily.
The personal loan online is obviously a great facility. If a person is not comfortable with an online application or there are any other network or availability issues, the personal loan can be taken offline as well. Contrary to that a credit card loan can be only taken online.
A credit card comes with an annual fee. Whether you use it or it remains untouched this amount is mandatory to pay. In a personal loan, there is no such fee or charges are taken.
For higher sum and lower rates, easy application, and tough monetary security, little application time, and a longer payback period nothing can be better than a personal loan. As the personal loan is available online, it makes it even easy to get for an emergency as well. Starting from the application to approval, everything is smooth and time-saving when you apply online. To save your money on interest, make sure you apply for a loan from a lender that offers a flexible repayment option so that you can repay conveniently without any burden.