When you come in need of liquids fund, you have two options to access, personal loans or credit card loans. You can easily access instant cash from both options.
If you are confused about choosing the best option between these, then here is a complete guide for you. If you want to covet short-term debt, you should get an online credit card loan. If you want to get long repayment tenure, then personal loans are best for you.
Read more to make a close look at credit cards and personal loans, with their benefits and drawbacks.
Personal loan vs. credit card
A personal loan is provided by a lender at a fixed interest rate. The tenure of personal loans ranges between 12 to 60 months through monthly installments or EMI.
The personal loan applications of salaried individuals are more easily approved by lenders than those of self-employed people. On the other hand, a credit card loan is used to resolve debt. In this, the borrowed amount is based on funds you spend on the card and the balance left at the end of the monthly billing cycle.
Benefits of personal loan
- The personal loan eligibility criteria are less strict than credit card loans.
- If you want to avail loan at a low-interest rate and consolidate debts, then personal loans are the best option.
- Personal loans are fit best in situations where you need the lump sum amount to meet various needs.
- Once the verification of your documents is complete, the loan amount is disbursed into your account within 30 minutes.
Benefits of credit card loan
- A credit card loan is a type of loan you can apply for at any time with a lender without any documentation.
- If you have a good credit score, then you are eligible to get the benefits of a credit card loan.
- You do not need to visit the bank branch to apply for a credit card loan.
- Select cards also provide options to transfer balances at 0{6092bf85bb027f8192371ba1511a1e08c625facb91a9a7882360247e9bb6f9cf} interest with a repayment tenure of 12-21 months that can handle the debt consolidating.
Drawbacks of personal loan
- The interest rate of personal loans lies between 13{6092bf85bb027f8192371ba1511a1e08c625facb91a9a7882360247e9bb6f9cf} to 36{6092bf85bb027f8192371ba1511a1e08c625facb91a9a7882360247e9bb6f9cf}, with extra processing fees.
- You are not able to properly make the fixed payment schedule in the case of a personal loan.
- Your credit score should be high to get a low-interest rate personal loan.
- You must complete the necessary documentation to get approval for the personal loan.
Drawbacks of credit card loan
- The interest rate on credit card loans is higher due to card APR
- You need to pay the late fees, limit fees, and annual fees to avail of the credit card loan
- Your credit score should be more than 700 to become eligible for a credit card loan at a low interest rate
Conclusion
From overall factors, both personal loans and credit card loans appear the same. Choosing the specific option from both depends upon the need or interest rate.