4 Differences Between Personal Loans And Credit Card Loans
Moving into a new house, preparing for a family wedding, purchasing a new car or travelling abroad are some common situations that require extra finances. When faced with these scenarios or emergencies like medical expenses, one option you can consider is taking a personal loan. With it you can obtain the necessary funding from a financial institution without needing to pledge an asset. However, another option you can turn to in order to get money even more quickly is a credit card loan. Here, a portion of your credit card limit is offered to you as a loan. But which of these two will best meet your needs? To make a wise choice, look at the differences between personal loans and credit card loans.
Ease of documentation
When applying for a personal loan, you need to furnish documents like ID proof, income proof in the form of salary slips, bank account statements and other KYC documents. The processing of these documents can take a few days. On the other hand, a credit card loan is pre-approved and generally does not require you to submit any documentation. This allows you to get your hands on finance faster.
Eligibility and securities
Personal loans are given once lenders have carried out basic checks to ensure that you can pay back the amount. You generally need to be between 21 and 60 years of age, have a minimum income and possess few years of work experience. Credit card loans are tougher to obtain. This is because you must first get a credit card by proving your capabilities with a stable income and a good CIBIL score. Post obtaining the card, you must fall into the category of customers who are eligible to get a credit card loan. Such customers are usually those who have a history of making timely payments. In terms of securities to be pledged, both personal loans and loans on credit cards are unsecured loans.
Loan amount and end use
The loan amount varies from lender to lender and upon your repayment capabilities, but you can get a personal loan running into lakhs. For example, the Bajaj Finserv Personal Loan gives you an amount of up to Rs.25 lakh. In case of a credit card loan, your loan amount depends on your credit card limit and on the schemes that your lender is offering. Some lenders offer loans strictly up to a few lakhs or up to the credit limit, while others offer a loan that exceeds the credit limit. When it comes to the end use, both a personal loan and a credit card loan can be used in any manner.
Interest rates and tenor
Personal loans tend to carry some of the highest interest rates. You can get a better deal by maintaining a good credit score and an ideal debt-to-income ratio. For a personal loan the tenor normally runs up to 60 months. With a credit card loan, you are more likely to get a lower interest rate than a personal loan. However, this is subject to the policies of the lender and will vary on a case to case basis.
If you are looking for a credit card that gives you quick finance at affordable interest rates, fees and charges, consider the Bajaj Finserv RBL Bank SuperCard. Here you get an interest-free loan for up to 90 days, once a year. You can convert your pre-approved credit card limit into an instant loan by simply using your smartphone app and there’s no need of visiting a physical branch or submitting any paperwork. A flat 2.5% fee will be charged to process the loan. What’s more, you can repay the amount in 3 easy installments.
You get other benefits as well when you choose the RBL Platinum SuperCard. For instance, you can use it at an ATM to withdraw interest-free cash for up to 50 days. Additionally, there are plenty of reward points and appealing offers up for grabs when you use the SuperCard. Getting started is simple and you can enjoy from instant approval when you check your pre-approved credit card offer.
So keep all these differences in mind, compare them with your needs and choose a loan accordingly.