There will come an occasion where you will require additional funds on a short notice. This is a prominent case in any financial emergency. In this case, you can opt either for a personal loan or a credit card loan.
But how do you know which option is the best choice for yourself? Each of these options offers a unique set of features and benefits that will suit different financial profiles and requirements. Let us take a look at each step taken for each option.
Comparison between the application processes
Although most loan applications follow a similar process, they both include unique additions. In this case, both the loan applications offered due diligence. Nevertheless, the credit card loan was more easily available as compared to the personal loan. With the personal loan, one would need to submit pay slips, form 16, bank statements and KYC documents in order to get the personal loan processed. However, with the credit card loan, you only need to contact your bank for a loan and the loan amount will be credited to your account after it has been processed.
Comparison of processing fee and tenure
Both loans come with a processing fee that ranges between 0.5 to 1% depending on the institute you are applying to. However, the tenure of the credit card is considerably favourable as compared to the personal loan. The personal loan tenure is at a minimum of 12 months to 3 years as compared to 6 months of a credit card loan.
Comparison of quantum of loan
The quantum of the loan plays an important role, as it also determines the interest rates and tenure of the loan. However, it also reflects on how much funds you would want. For a small loan, the credit card is valuable, as there is a credit limit to the amount. However, if you need a loan of a larger amount, the personal loan will be a better option.
Comparison of Interest rates
Normally, the personal loan interest rate is in between 12 to 20 % depending on the institute you apply to. However, credit card interest rates are in between 10 to 18 %. However, credit card loans are normally offered at a flat interest rate. As compared to the personal loan, the interest rate for this loan is offered at reduced balance rate.
In the end, each of the loans has its own benefits and features. These features and benefits will suit your needs depending on your financial requirements. However, it is crucial that you consider factors such as the personal loan interest rate or even the credit card benefits before you apply for each option.