Anyone can find themselves in need of financial aid in today's fast-paced world, whether it be for an emergency or to accomplish personal aspirations. There are several credit options available today that can help you manage different types of expenses. However, choosing the one that best suits your needs can become challenging. Credit cards and instant personal loans are two common choices that people frequently think about. Many individuals can get confused when it comes to loan on credit card vs personal loan. To grasp the differences between these two choices, let us take a closer look at them.
Credit card loan
Credit card debt is the lender making an advance payment to the merchant on your behalf, which you pay back according to the billing cycle. You get a card limit based on your monthly income and other parameters, that you can use to make purchases without paying right away.
Insta Personal Loan
A loan, on the other hand, is a form of one-time credit extended by a bank or a financial institution, which you repay over a fixed period. Applying for a loan of any kind may be a challenging and time-consuming process. With that in mind, Bajaj Finance has introduced the Insta Personal Loan to offer an instant loan to its customers. This loan product is an excellent option for individuals in urgent need of funds. Existing customers already have a pre-approved offer, while new customers can generate an offer for themselves with just a mobile number and an OTP. You do not need to have a credit card to get a pre-approved offer for an Insta Personal Loan.
Credit card loan vs personal loan
Let us compare credit card loans with Insta Personal Loans using the following criteria:
- Loan amount
The maximum credit card limit often ranges up to two or three times your monthly income. For example, if you make Rs. 25,000 per month, your credit limit may be between Rs. 50,000 and Rs. 75,000. Increasing the credit limit on your card is entirely up to the lender.
With a Bajaj Finserv Insta Personal Loan, you can get a much higher loan amount of up to Rs. 12,76,500. Several factors influence the offer that you get, such as your debt-to-income ratio, monthly salary, credit score, and so on.
- Expenses
While a credit card can be used to make a wide variety of purchases, you are restricted to businesses that accept credit card payments. This can be difficult in scenarios such as home repairs where you need to make payments to several vendors, not all of which may accept credit cards.
An Insta Personal Loan, on the other hand, does not have these restrictions. Since the money is disbursed immediately into your bank account, you can utilise it for any payments you need to make. This is beneficial for small and big-ticket expenses such as house renovations, weddings, higher education, and so on.
- Instalment debt and revolving debt
Credit card loans and personal loans both deal with debt, however, the debts they generate are very different. The repayment of credit card debt is open-ended and linked to an interest that you pay, which fluctuates with the monthly dues. This type of debt is known as revolving debt.
Insta Personal Loans are associated with instalment debt, in which you must make fixed monthly payments towards the total amount you have borrowed. In this case, the interest rates are fixed, regardless of the amount you utilise. However, you can check your offer and choose to borrow a lower amount if it suits your needs and repayment capacity.
- Repayment method
At the end of your billing period, you have the option of repaying your credit card bill – either in full or a percentage of the amount depending on the lender’s criteria.
In Insta Personal Loans, you get to choose a fixed repayment tenure and pay back the amount in equated monthly instalments (EMIs). While you can choose to pay your credit card bill through different payment methods, EMIs are usually paid back by setting up a NACH mandate with your bank.
- Tenure
A credit card's repayment period might be anything between 30 and 45 days, making it more suited for smaller expenditures that you can repay within the time. High interest rates are applied to the outstanding balance in the event of non-repayment or delayed payments.
The Insta Personal Loan amount can be repaid over a period of up to 63 months. If you need a longer repayment tenure, an Insta Personal Loan is the best option.
In summary, below are the key differences between credit cards and Insta Personal Loans.
Pros and cons of an Insta Personal Loan and credit card debt
Difference |
Credit card |
Insta Personal Loan |
Loan amount |
Low, linked to your monthly salary. |
High, up to Rs. 12,76,500. |
Expenses |
To businesses and merchants that accept credit cards. |
The amount is directly credited to your account, and you can use it for any type of expense. |
Repayment method |
Any payment method at the end of the billing cycle. |
Fixed EMIs, by setting up a NACH mandate. |
Tenure |
A fixed billing cycle, typically between 30 and 45 days. |
Longer tenure of up to 63 months. |
When to opt for a credit card loan?
The choice depends on your needs and preferences. Individuals usually opt for a credit card loan when they need small amounts that they can quickly repay.
When to opt for a personal loan?
Personal loans are a great option when you need a bigger amount and a longer tenure, at affordable interest rates.
Credit card loan or a personal loan – which is better?
Ultimately, the choice between a credit card loan or a personal loan depends on your needs. You must assess your needs and determine the amount of funds you need, your repayment capacity, and the time you have on your hands. Depending on these factors, you can choose the form of credit that suits you best.
Insta Personal Loan offers funds of up to Rs. 12,76,500, with money deposited in as little as 30 minutes* to 4 hours. Existing customers receive pre-approved offers, whereas new customers can instantaneously generate their pre-assigned loan limit using their mobile number and one-time password.
Check your Insta Personal Loan offer today for personalised offers and a hassle-free borrowing experience.
*Applicable for select customers.
