Personal loans and credit loans are both used to get funds from lenders. But both can be used under different terms based on financial goals. Keep reading to understand the key differences between a Personal Loan and credit card loan and which one to choose.
What is a Personal Loan?
A Personal Loan is an unsecured loan you can use to cover any personal expenses. These expenses may include home renovation, funding a wedding, covering higher education costs, etc.
What is a Credit Card Loan?
A credit card loan or a loan against a credit card is a financing option that allows you to borrow money from your credit card limit. You repay the borrowed amount in instalments with interest. However, this credit line often comes with higher interest rates than a Personal Loan.
Personal Loan Vs Credit Card: Key Differences
Here are the key differences between a Personal Loan and credit card loan:
| Points of Distinction |
Personal Loan | Credit card loan |
| Best For |
Large, one-time expenses |
Daily Expenses |
|
Interest Rates | Fixed | Variable |
|
Nature of Credit | An unsecured financing option that provides substantial funds upfront and is repaid in fixed instalments over a specified period. | A revolving line of credit that allows users to borrow funds from their allotted credit limit and repay them over time or in full each month. |
| Usage Flexibility | You can cover major purchases including home renovation, debt consolidation, funding a wedding, etc. | You can cover day-to-day expenses, online shopping, and emergencies. |
| Offered Loan Amount | You can secure a loan amount of up to ?30 Lakh. | The loan amount is limited to a portion of your credit limit. |
Personal Loan vs Credit Card Loan - Which One is Better?
Determining whether a Personal Loan or credit card loan is better depends on various factors such as financial situation, needs, and borrowing habits. Personal Loan offers high loan amounts and flexible tenure, while credit card loan offers the convenience of paying for expenses and paying bills later.
Advantages of a Personal Loan
The following are the benefits of availing a Personal Loan:
1. Higher Loan Amount and Usage Flexibility
2. Flexible
Repayment
3. Lower Interest Rates
Advantages of Credit Card Loan
The points below highlight the benefits of using credit card
loans:
1. Streamlines Daily Expenses
2. Revolving
Credit
3. Builds Credit History
ALSO READ :- What Are the Best Reasons to Apply for A Personal Loan?
How to Apply for a Credit Card Loan?
Follow the steps below to apply for a loan against a credit card online:
- Step 1: Check your eligibility and inquire about options.
- Step 2: Submit all the necessary documents.
- Step 3: Choose the repayment tenure and loan amount as per eligibility.
- Step 4: Confirm the terms and conditions.
After successful verification, you can withdraw the amount from your credit card.
How to Apply for a Personal Loan with Poonawalla Fincorp?
Here are the steps to apply for a Personal Loan with Poonawalla Fincorp:
- Step 1: Click on "Apply Now".
- Step 2: Fill out the application form.
- Step 3: Upload all necessary documents.
Upon verification, the loan amount will be credited to your bank account.
To Conclude
A Personal Loan offers funds for unexpected expenses requiring
significant amounts. It provides repayment flexibility and lower
interest rates. Credit card loans provide usage flexibility for
everyday spending and emergencies. They also help you build credit
history. To make an informed borrowing decision about a Personal Loan
vs. credit card loan, you must consider your financial goals,
borrowing needs, and repayment capacity.
If you are looking for
quick funding option or want to consolidate high-interest debt, you
can avail of a Personal Loan with Poonawalla Fincorp at competitive
interest rates.