If you’re confused between a personal loan and a credit card loan, then you’re at the right place to clear this confusion. The type of loan you should choose depends on your loan requirements. If your required amount is low, then a credit card loan is best, but if you require a large sum, maybe to buy a vehicle or property, then you should go for a personal loan. Various factors must be considered before choosing a loan.
If you read the entire blog, you will easily decide whether a personal or credit card loan is better.
Let’s first understand what a personal loan is. In essence, personal loans are unsecured loans for which no collateral or security is needed. Personal loans are usually taken out when we require a huge amount, like for educational purposes, property purchase, or vehicle purchase.
A credit card loan is a type of loan in which a card is issued to you with a predetermined credit limit based on your credit score and financial history. These are usually pre-approved cards that banks offer to their customers or other customers who have a good credit history. A credit card loan is a quick loan facility that can be used in case of any emergency.
| Differentiation Factors | Credit Card Loan | Personal Loan |
| Suitable | In cases of urgency or emergency, or for minor purchases | For a large sum or a lengthy loan |
| Amount | Pre-determined loan amount is given, i.e., credit limit | The loan amount can be huge, depending on your financial history |
| Interest Rates | The interest rates are generally high | Low interest rates compared to credit cards |
| Approval | Generally, the loan is approved instantly | The loan approval takes time, maybe a day or a week |
| Loan tenure | 3 months - 5 years | one year or ten years, or more |
| Documents | No additional documents | Address proof, income proof, and identity proof |
You should opt for a personal loan because:
You should select a credit card loan because:
In summary, only you can decide which loan is better, a personal or a credit loan, because both have their benefits. If you want a quick, small amount loan, then a credit loan is perfect for you, whereas if your requirement is a high amount loan, like 20-30 lakhs, then a personal loan is best. So, before making a final decision, think about your requirements and then choose what you want: a personal loan or a credit loan.
Personal loan vs credit card EMI – which has lower interest?
When comparing the two, you'll find that a personal loan has a lower interest rate while credit cards have higher EMI interest rates.
When should I choose a personal loan or a credit card?
If your requirement is a high loan with a fixed interest rate and for a long duration, then always opt for a personal loan rather than a credit card loan.
Is it better to take a personal loan over a credit card?
If your need is a quick, small amount, then it is better to use a credit card, but if your need is a high amount, a low-interest loan, then taking a personal loan is the better option.
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