Which is better: A
personal loan or a credit card loan?
Financial
institutions in India are trying to make unsecured loans more accessible to
people. Nowadays, these loans are sanctioned within a day and can be used to
meet instant financial demands.
A personal loan is a popular type of unsecured
loan which can cater to significant financial requirements. These loans can
also be taken against the unutilised limit of a credit card. Some lending companies provide
this facility making it even easier for those seeking immediate cash.
While anyone can avail conventional personal loans,
loans on credit cards can only be obtained by respective cardholders. Now, the
confusion arises regarding which one offers more benefits – a personal loan or
a loan on creditcards.
So, here is a comparison between these two loans for
helping you choose the better.
Personal loans
Personal loans provide the following benefits to
borrowers:
- High financing
amount
One of the significant benefits of personal loans is
that they can provide financing up to Rs. 25 Lakh.
A credit card, on the other
hand, won’t provide such an amount as loans.
- Repayment tenors that can fit any requirement
Standard personal
loans have a repayment tenor ranging from 12 to 60 months.
Thus, borrowers get
flexibility in repaying the credit.
- Speedy approval and disbursal process
Financial
institutions can approve a personal loan within 5 minutes and disburse the same
within 24 hours.
Thus, individuals can avail these loans for emergencies like
medical situations.
- Hassle-free documentation procedure
A crucial factor
that contributes to the rapid approval and disbursal of personal loans is its
minimal documentation procedure.
- Flexi Loan facility
Some financial institutions provide a Flexi Loan facility where
customers can also choose to pay only the interest as EMIs and repay the
principal at the end of the loan tenor. Thus, Flexi Loan facility reduces the EMIs by up to 45% as compared
to traditional personal loans.
Now, take a look at the features of loans on credit
cards.
Credit card loans
- No interest needed
A unique feature of
these loans is that customers don’t have to pay interest on them, unlike
personal loans.
Generally, financial institutions provide these loans free of
interest up to a specific period, for example, 90 days.
- No documentation required
An applicant has to
provide all relevant documents when applying for a personal loan even though
the process is minimal. However, with loans on credit cards, a borrower does
not have to submit any document.
Thus, the loan approval and disbursal process
are even faster than unsecured personal loans.
These are the two
major features that come
with these loans. However, borrowers can avail the following benefits when they
apply for a credit
card which a standard
personal loan will not provide:
- Reward points
Reward points make
credit cards one of the best forms of payment while shopping online or offline.
Cardholders can redeem accumulated points for cashbacks, vouchers, and coupons
to make future purchases affordable.
- Joining bonus
A cardholder can
receive reward points as joining bonus when they get credit cards without
making any transactions.
For example, one can
get up to 20,000 points as a joining bonus with the Bajaj Finserv RBL Bank
SuperCard.
This SuperCard combines the power of 4 cards in one and brings
several industry-free features.
A customer can not only get an interest-free
loan but also interest-free cash withdrawal from ATMs for a period of up to 50
days.
- Extra features
Cardholders can get
complimentary airport lounge access, fuel surcharge waiver, free movie tickets,
and offers on dining.
The above are some
of the features that individuals get when they apply for a credit card. Additionally, availing loans
on credit cards can be much more beneficial than standard personal
loans.
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