The majority of people often liquidate their savings in case of circumstances that call for immediate access to finances. Saving money, however, takes a long time, and even before you begin, urgent financial obligations might deplete your reserves.
Instead of liquidating your finances, it makes more sense to take a loan from a reliable financier. Most financial institutions offer credit card loans or personal loans to customers. While both of these are unsecured loans, they are not the same. Before you can decide which of these must be taken for emergencies, let’s understand these loans better.
What is A Personal Loan?
Personal loan is a sum of money borrowed from a financial institution for a specific tenure. This borrowed amount of money can be used for funding diverse financial needs, and you can repay it in the form of monthly instalments, as per your preferred tenure. Taking a personal loan requires no collateral, which makes it easy to avail financing and fund requirements easily.
What is A Credit Card Loan?
Unlike personal loans, credit card loans are given out only to credit card holders. Generally, a specific part of your credit card limit is offered as the loan amount. Similar to a personal loan, borrowers of credit card loans can easily choose how they wish to spend the money they’ve borrowed.
Basic Differences Between Personal Loans and Credit Card Loans
While there are a few similarities between a personal loan and a credit card loan, there are also some fundamental differences, which have been listed below:
| Considerations | Personal Loans | Credit card loans |
| Who can apply? | Everyone can apply for Personal Loan | Only credit card holders are eligible |
| Where to avail? | You can avail a personal loan from any financial institutions | Only your credit card company can offer you a credit card loan |
| Rate of interest | Compared to credit card loans, the interest rate is lower | The rate of interest is higher |
| Loan amount | Borrowers can take a significant amount as loan | Only a part of your credit limit is offered as the loan amount. Therefore, the loan amount is not as high, compared to personal loans |
| Approval and disbursal time | Time taken is longer for approval and fund disbursement | Instant approval and fund disbursement |
As you can see, there are several differences between both these loan types. However, as you can see from the above findings, borrowers do not have many options in case of credit card loans. On the other hand, borrowers get many options when it comes to applying for personal loans.
They can survey the market for the best available offers, rate of interest, tenure, foreclosure options, and then choose the lender. And the most important aspect for any potential borrower is to evaluate the rate of interest and repayment flexibility. With high interest rate, a person may not to be able to loan the desired amount or will have to strain the pocket later on.
A financial decision as big as taking a loan either as personal loan or credit card should be taken with utmost cognizance.
So, Which One is Better – Personal Loan or Credit Card Loan?
While both loans are unsecured, these cater to the individual needs of different customers. It is better to select these, basis your purpose. If you think that a small sum of money can address your needs, you can choose to opt for credit card loans. However, you would need to have a good pre-approved offer to avail a credit card loan.
On the other hand, personal loans are a better choice if you’re looking for a larger sum of money. You can take a personal loan for education, home renovation, vacation, wedding, and many other personal reasons. You can also take a personal loan to pay off other debts.
A credit card doesn’t allow the borrower to loan the money beyond a certain limit and the repayment guidelines are stringent. While credit cards are a better option with small payments at high interest rate, a personal loan allows the borrower to apply for higher loan amount with repayment flexibility.
credit card loan vs personal loan
How to Apply for a Credit Card Loan?
To apply for a credit card loan, you typically follow a process similar to applying for a regular credit card.
Research and compare credit card loan options.
Check your credit score, prepare the documents required, and complete the loan application.
Review terms and conditions, submit the application, and wait for approval.
Accept the loan offer post-approval and finally receive the funds.
How to Apply for a Personal Loan?
To apply for a Personal Loan, you can follow the steps mentioned below
Determine your loan requirements.
Search for financial institutions like credit success that provide Personal Loans.
Check your credit score as it plays a vital role in loan approval and interest rates.
Gather necessary documents.
Complete the application and review the loan terms and conditions.
Submit the application and await approval and decision from the lender.
Post approval, accept the loan offer and receive the funds in your bank account.
In Conclusion
If you choose to go for a personal loan, it is advisable to compare all the offers available in the market. First, decide how much money you need. After that, compare the interest rate, tenure, foreclosure/pre-payment options, and calculate your EMI before choosing the lender.
credit success offers Personal Loans starting at just 9.99% p.a. rate of interest. Moreover, you can reap the benefit of zero foreclosure charges and a very small processing fee.
