Uncertainties in life are always unpredictable and some might demand financial aid to remedy the situation. Having an instant source of credit in such trying times can be a lifesaver, especially when it’s a medical emergency.
Personal loans can be your best friend when you need an urgent access to a line of credit to manage immediate financial obligations. Let’s dig deeper to find out what a personal loan entails and how it compares to other immediate lines of credit such as a credit card loan.
What is a personal loan?
A personal loan can be defined as an unsecured loan that people opt for to meet immediate and necessary financial obligations. Since these loans are unsecured, it doesn’t demand any type of security or collateral from the borrowers. This makes a personal loan more lucrative than any other type of loan that demands collateral. There are no restrictions on how the funds will be used in case of a personal loan. You can use it for a wide range of things including studying, travelling, marriage, renovation, automobile, etc. The flexibility offered by a personal loan is enormous. Many reputed financial institutions such as Clix Capital also offers customized personal loan to borrowers who have a specific goal in mind during personal loan application.
What is a credit card loan?
Credit card loans also offer an easy and immediate line of credit to borrowers in need. Credit card loans are pre-approved loans that don’t require any additional documentation and are granted to credit card users. The loan amount is contingent on the credit card limit of the borrower. It is also one of the quickest methods to obtain an unsecured loan that can be used for various purposes. Most credit card users have an unutilized credit amount that is usually offered as a loan to users. Many a time, a credit card loan is confused with a cash withdrawal. It is important to note that a credit card loan is different from a cash withdrawal using a credit card. Different card issuers have varied policies for cash withdrawal using credit cards.
Personal loan vs credit card loan
Now that we have a fair idea as to what a personal loan and a credit card loan entail, let’s compare both to see how they differ.
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- Documentation requirements
A personal loan application requires only a few important documents including a PAN card, identity proof and income proof. This can vary depending on the lender’s policies. A credit card loan on the other hand doesn’t require the credit card users to submit any additional document. Since the lending party is offering a loan to a registered customer, they don’t have to check for additional details and the loan is processed faster. However, reputed non-banking financial institutions such as Clix Capital also offers an instant personal loan that is processed and disbursed within hours.
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- Interest rate
The interest rate on personal loans can vary depending on your lenders and financial institutions. The current personal loan interest rate offered by banks is 10.5% depending on the lending institutions and the credit profile of the borrower. Those who have a good credit score can get a personal loan at a lower interest rate.
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- Loan tenure
If you want to opt for a loan that offers a longer tenure and flexible repayment options, you must opt for a personal loan as these are offered for a longer duration. Credit card loans on the other hand have a lower loan tenure and it can get financially challenging to keep up with the large EMIs in a short period.
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- Total loan amount
Personal loans usually offer a higher loan amount and can be taken to meet even bigger financial obligations such as studying abroad, marriage, etc. You can avail a large sum through personal loans. Clix Capital offers up to INR 25,00,000 through a personal loan. The total loan amount in the case of credit card loans is lower and also contingent on the credit card limit of the borrower. It is good for meeting a relatively smaller financial obligation.
It is important to note that both personal loans and credit card loans are unsecured. You don’t have to pledge any security against the loan and can use it at your discretion.
Major advantages of a personal loan
After comparing personal loan vs credit card loan, you must have got a fair idea as to which one is more suitable for your needs. Generally, personal loans are a good choice if you want a higher loan amount with a flexible repayment period. This reduces the probability of default since you can easily budget and repay the loan amount through EMIs. Everyone might not be eligible for a credit card and therefore they might not get a credit card loan. However, most people can get a personal loan even with little credit history and low income. The amount offered might vary but one can easily avail of a personal loan. Here are some important advantages of a personal loan.
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- The eligibility criteria for personal loans require minimal documentation and are less stringent when compared to credit card loans
- A personal loan is a great way to avail of consolidated debt with a low-interest rate
- Institutions like Clix Capital allow people to avail an instant personal loan online from the comfort of their homes
- Personal loans offered by industry leaders like Clix Capital are disbursed quickly and can be opted for time-sensitive financial emergencies like medical expenses
- A personal loan can be used for a wide range of activities without any limitations
If you are looking for a customized personal loan plan that is best suited for managing your expenses, we at Clix Capital have something in store for you! Click here for an easy personal loan application process!
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You can also reach out to us at hello@clix.capital or call us at 1800 200 9898
