We are all familiar with personal loans and credit cards, the most popular and commonly used loans in India. Personal loans are very popular these days. India is a big, potential market for personal loans and credit cards.
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|
Personal loan |
Credit card |
Loan type |
Unsecured |
Unsecured |
Interest rate |
13-22% a year |
24-36% a year |
Tenure |
Usually taken for a higher tenure (1-5 years) |
Usually taken for a lower tenure (interest-free credit period up to 45 days) |
Loan amount |
The bank sanctions the loan amount on the basis of credit score and the income proof |
The predefined monthly credit limit |
Documentation |
It requires certain documents to be furnished |
It is instantly approved and granted |
Repayment |
Paid through monthly EMIs |
Paid during the payment cycle |
See Also: Get Personal Loans in Emergency Situations
See Also: Personal Loan In Bangalore
Personal loans can be availed if:
Credit cards are used if:
See Also: What Is A Personal Loan?
Which One Should I Choose Whether a Personal Loan or a Credit Card?
Ask yourself the following questions to make the right choice:
1. How Much Money Do I Need?
Credit cards are preferred over personal loans if you need lesser funds and vice versa.
2. How Much Time Do I Require to Make Repayments?
Avail a personal loan if you need more than a year to repay the loan. Credit cards are an ideal choice if you can repay the debt within a few months. Use a to understand and compare the cost of each option. Use the one that saves your money.
3. Do I Require Cash?
Check if you need cash. The point you must understand here is that credit card cash advances normally come with extra fees. Definitely not a good idea.
4. How Much Should I Spend on Shopping?
If you want to buy something within the given credit limit, use a credit card. On the contrary, avail a personal loan if you need more funds.
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