There are many times when we need to buy something urgently but we are short of money. Need of money can arise in other situations as well. It can be any medical emergency, you might need to buy a new laptop or a piece of furniture or even it can be your wedding expenses, and you find yourself in need of some more money.

What can be done in these situations?

We can go for a credit card loan or we can opt for a personal loan. There are various factors to be kept in mind before deciding whether to use your credit card or you must apply for a personal loan.

What is a Personal Loan?

An instant personal loan is an unsecured loan means you need any collateral or security to avail it. You can apply for a personal loan for your various needs such as for higher education, wedding, vacation, child-birth, renovation of your house and so on.

What is a Credit Card?

A credit card is a rectangular plastic or metal payment card issued to an individual to pay for the expenses of goods and services. The card holder pays it back with interest in a stipulated time.

You can say, the credit cards are revolving credits, which you can use repeatedly.

Comparison between a Personal Loan and a Credit Card

Purpose

Usually, we use credit cards for big or small purchases for our personal or business purposes whereas we take personal loans for weddings, renovations, holiday trips, children’s education, etc.

Documentation

A few documents and a simple verification process are required to procure an emergency personal loan but no extra documents or verification is required if you already possess a credit card.

Loan Amount

If you need a large amount of loan, you can apply for a personal loan but with a credit card, you can use it in a pre approved limit only.

Repayment

You can repay your personal loan, through EMIs within a specified tenure. If we talk about credit cards, you have to repay by the end of the crest period.

Interest Rate

In comparison with credit cards, interest rates are quite competitive in personal loans. As interest rates are higher, if you delay the credit card bill payment. On the other hand, the interest rate is low, in case the payment is delayed.

Benefits of Personal Loan

❖    The eligibility criteria is quite simple for personal loans in comparison to credit cards.

❖    You can apply for a personal loan online and offline both.

❖    After submission of documents, simple verification is done and the personal loan amount is disbursed within 30 minutes.

❖    You can get a consolidated amount in the personal loan, when you need to pay for various things or services, which may be in cash.

❖    You can repay the personal loan in installments on a monthly basis.

Shortcomings of Personal Loan

❖    You must have a good credit score.

❖    Necessary documents must be available for the approval of the personal loan.

Benefits of Credit Card

❖    You can avail a credit card after submitting certain documents.

❖    You don’t need to visit a bank to get a credit card.

❖    You can get a credit card if you have a good credit score.

Shortcomings of Credit Card

❖    Depending on your card’s APR, Interest rates can be very high.

❖    You can pay with your credit card, but in case you need cash, you have to pay additional interest from day 1 on cash withdrawals.

❖     Your credit score must be above 700, if you need a credit card.

❖    You have to pay annual fees, late fees and over-the-limit fees for credit cards.

Which is Better - Personal Loan or Credit Card?

If you need money for big purchases, medical expenses which are beyond your credit card limit, educational purposes, weddings, childbirth, funerals, etc. where you require money more than your credit limit, then the personal loan is the best option.

You can select the tenure which suits you the best and repay the loan in affordable monthly installments.

In some places, credit cards are not accepted, you need to pay in cash, then personal loans come to your rescue.

The credit card is the best option if you need revolving money. you can use the money for any purchase or service within your credit limit, repay it, then again you can repeat the cycle till you possess the credit card. So, you can say that credit cards work for your everyday purchases.

So, before deciding on a credit card or a personal loan, you need to know the amount you need as a loan, how much interest you can pay, how much period you need to repay the loan.

If you need a substantial amount for some emergency expenses or big purchases, a personal loan is always a better option than a credit card.

At Zavron, we provide you with easy and hassle free personal loans for all types of needs.

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