Personal Loan vs Credit Card Loan - PowerPoint PPT Presentation

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Personal Loan vs Credit Card Loan

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personal loan vs. credit card, which of the two is better? The answer depends on a lot of factors including your eligibility for the loans, the amount your need, the EMI you can afford and so on. – PowerPoint PPT presentation

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Date added: 20 May 2019
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Title: Personal Loan vs Credit Card Loan


1
Personal Loan vs Credit Card Loan
2
Introduction
  • In times of financial emergency, loans always
    come to the rescue.
  • For short-term emergencies, personal loans come
    in handy, but not everyone is equally eligible
    for a personal loan. Also, personal loan interest
    rates are quite high which discourages a lot of
    customers.
  • At the same time, loan on credit card is also
    gaining popularity in the market because of their
    simple nature and easy approval.

3
Personal Loan
  • A personal loan can be taken for any personal
    need say medical emergency, wedding expenses,
    vacation, home renovation, studies, buying a car,
    etc.
  • Being an unsecured loan, the rate of interest on
    personal loans is naturally on the higher side.
  • If you have an excellent credit score and meet
    other eligibility criteria set by the bank, there
    are chances that you could get a reasonable rate
    on loan.

4
Common Benefits of a Personal Loan
  • Anyone can take loan to meet ones immediate
    individual needs. Banks usually do not put
    restrictions on the end use of the personal loan
    proceeds, except gambling and other speculative
    purposes.
  • The application process is easier and quicker as
    compared to secured loans.
  • The loan amount can range from a mere Rs 1 Lakh
    and can go up to Rs 50 Lakh.
  • The loan amount you will get depends on your
    requirement and repayment capacity.
  • The repayment tenure of personal loans usually
    ranges from 1 to 5 years. However, some
    banks/NBFCs also give personal loans for a longer
    tenure say 10 years.
  • Though the personal loan is a considered a costly
    borrowing, you can get a reasonable rate of
    interest based on solid credit history and lower
    debt burden on your shoulders.

5
Credit Card Loan
  • Loan on credit card is much like a personal loan
    in several aspects.
  • The loan proceeds can be used to fund a financial
    emergency.
  • There is no restriction on the use of money.
  • Typically, the bank monitors how you have used
    your credit card over the past few months. If you
    have made a credit card payment on time and
    maintained a good utilization ratio, the bank
    assigns a pre-approved loan amount to you.
  • So, if you have already been pre-approved, you
    can easily avail the service, but if not, this
    service may not be of much help during
    emergencies.

6
Benefits of Credit Card Loan
  • Just like personal loans, credit card loans are
    also unsecured and hence do not require any
    collateral security.
  • No additional documentation is required which
    makes the application and approval process easier
    and much faster.
  • One can get to pay back the loan in easy EMIs
    over a time period, decided by you.
  • One can apply for the loan directly through the
    net banking portal of your credit card provider,
    and within 3-4 working days, you can get the
    amount. Instant disbursal facility is also
    available with some banks.

7
Personal Loan vs. Credit Card Loan
  •  Personal Loan
  • Credit Card Loan
  • Eligibility is decided once you apply for the
    loan.
  • Loan tenure may range anywhere between 1-5 years,
    sometimes even 10 years.
  • No collateral is needed for the loan.
  • The loan amount depends on your repayment
    capacity as judged by the bank.
  • Borrowers need to submit relevant documents at
    the time of application.
  • Usually, only pre-approved customers can apply.
  • This loan is mostly given for a shorter tenure
    say up to 3 years.
  • Collateral is not needed but your credit card
    limit may get blocked up to the amount of loan.
  • The loan amount usually depends on your credit
    card limit.
  • No additional documentation is required.

8
Personal Loan vs. Credit Card Loan
  • A Credit Card Loan amount depends on your credit
    limit, while, A Personal Loan makes more sense
    when you need a larger amount to fund an
    emergency. It is also a great choice if you are
    looking for a loan to consolidate your credit
    card debts.
  • On the other hand, loan on credit card can be
    used to fund a smaller need. If you have already
    been pre-approved for a particular amount of
    loan, there is a surety that you will get your
    hands on the money. Credit card loan is much
    quicker to avail than any other type of borrowing
    which makes it quite beneficial during
    emergencies. provider.

9
Conclusion
  • No matter what type of loan you avail, always do
    your research.
  • In case of a personal loan, shop around for a
    lower rate of interest lower processing fee and
    better terms and conditions.
  • Though you do not have much negotiation power in
    case of a credit card loan, you can still stay
    informed about what this loan entails.
  • Talk to your credit card provider to understand
    the fees and charges and the related terms.
  • Financial emergencies come without warning, but
    you should not lose your wit in such
    circumstances. Be a smart borrower and make a
    better choice.

10
Thank You !!!
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