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.
