Over the years borrowing money for financial emergencies has become a common practice. With banks and financial institutions introducing different types of loans that are suitable for almost every type of requirement, it has become easier for people to apply for loans and avail these facilities. As people now have more options to choose from, there are also more questions about which option is the best? Which loan suits their needs and is most beneficial for them? You might have heard of a credit card loan and personal loan if you have considered borrowing a loan. These are two of the most commonly borrowed loans these days. Both these loans have their own sets of benefits and even disadvantages. If you wonder which of these loans is better for borrowing, this article is the right place for you. This article is about credit card loan vs personal loan, we will share all the details regarding both of these types of loans and their features. This article will help you choose the ideal option for your needs.
Table Of Contents
To better understand the two types of loans, we must compare them in terms of their features, interest rates, advantages, and even disadvantages. We will be weighing all these aspects of both types of loans in the further sections. In this article, you can read about the following topics related to credit card loans and personal loans:
- What is Loaney?
- What is credit card loan and a personal loan?
- Features of credit card loans and personal loans
- Which loan has more benefits: credit card loan or personal loan
- 5 reasons why a personal loan is better
- Frequently Asked Questions
What Is Loaney?
This article is for our readers who are looking forward to comparing credit card loans vs personal loans. Both these loans can be availed of online. There is currently a wide range of online loan providing platforms that offer credit card loan or personal loan. Loaney is a reliable and trustworthy platform that offers personal loans to its clients for smaller amounts of up to Rs. 15,000. The key features of Loaney are lower interest rates, shorter repayment tenures, and pre-generated repayment plans. The clients need not pledge collateral, present a guarantor or even specify the reason for borrowing. Not much paperwork is required, and the eligibility criteria are simple for borrowing a loan on this platform.
What Is Credit Card Loan And Personal Loan?
To begin with, if you have queries about a credit card loan and a credit card or personal loan, you must read ahead. We will be defining all three of these terms for your convenience.
Most of us are aware of what a credit card is. It is a thin piece of metal or plastic issued by your bank or financial institution that can be used to pay bills, fund your purchases, and many other purposes. A credit card has a pre-approved limit on the amount that can be spent during the month.
A credit card loan can be borrowed against the pre-approved credit limit on your credit card, set by your bank. This loan is a great option if you need funds immediately.
On the other hand, a personal loan is an unsecured debt that can be borrowed from your banks and online loan-providing platforms. A personal loan is offered without pledging collateral and requires minimal paperwork from the applicant. The interest rates charged on a personal loan are lower compared to a credit card loan.
In the next sections, we will compare the features, benefits, and disadvantages of both credit card and personal loans.
Features – Credit Card Loan vs Personal Loan
To understand whether a credit card loan or personal loan is better suited for you, you must compare the features of the two. In this section, we will be looking at the salient features of these loans. This will help you identify which loan is the best depending upon your financial needs and cibil score.
|Credit Card Loans||Personal Loans|
|Can be borrowed against credit card limit||Can be borrowed from banks or loan providing online platforms|
|Can be used for making large purchases by businesses or by individuals||Can be used for a wide variety of purposes, and no reasons have to be specified|
|The credit limit is predetermined by the institution issuing the credit card||The credit limit depends on your CIBIL score and can vary depending on other factors|
Which Loan Has More Benefits: Credit Card Loan Or Personal Loan?
Every type of loan has its set of advantages and disadvantages. To understand credits card loans and personal loans better, we will take a look at the benefits of both these loans.
|Credit Card Loans||Personal Loans|
|Expensive purchases can be converted to EMIs||A loan for all your financial needs, be it an emergency or a planned event|
|Credit card loans are pre-approved||Personal loan approval takes only a few minutes on Loaney|
|You do not need to present a guarantor for this loan||You do not need a guarantor or collateral or even much paperwork to be submitted.|
Now that we have looked at the advantages of the two loans and compared credit card loan vs personal loan, we hope that you will have some clarity on which loan is better for you.
5 Reasons Why A Personal Loan Is Better
While a credit card loan and personal loan are both not very different from each other and have various benefits, in our opinion a personal loan is better than a credit card loan. The following reasons will help you understand this better:
- You can easily borrow a personal loan online from moneylenders or loan providing platforms.
- You can choose the amount to be borrowed as per your needs and not depending on your credit card limit.
- The repayment is flexible.
- The interest rates are lower.
- There is not much paperwork involved or any collateral to be submitted.
As we conclude our article on credit card loan vs personal loan, we have answered a few common questions regarding the same for your convenience.
Frequently Asked Questions
1. What is the interest rate charged on personal loans?
The interest rate charged is 36% per annum on personal loans if you apply on loaney.
2. Which type of loan is the best?
The best type of loan depends majorly on your needs and your ability to repay the loan. Out of personal loans and credit card loans, we would suggest borrowing a personal loan online.