Credit Card Loan vs Insta Personal Loan

Discover the key differences between these two financial options, including interest rates, loan amounts, and repayment terms.
Credit Card Loan vs Insta Personal Loan
5 min read
18 April 2023

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.

Check Offer

*Applicable for select customers.

Frequently Asked Questions

What is the difference between personal loan and credit card?

Insta Personal Loans and credit card debts are both significant lending products. They differ in several factors such as tenure, interest rates, loan amount, and so on. Consider each option carefully to make the right choice for yourself.

How do you apply for an Insta Personal Loan?

You can visit the Insta Personal Loan page. Enter the amount you need to borrow, and simply click on ‘CHECK OFFER’. Now, enter the mobile number and OTP. Once you see your offer, you can fill out the rest of the application in a few simple steps.

What differentiates an Insta Personal Loan from other types of loans?

Bajaj Finance offers Insta Personal Loans to existing as well as new customers. Choosing an Insta Personal Loan has several advantages.

  • Faster processing: You don't have to go through the long approval process that comes with regular loans.
  • Instant funding: The loan disbursal process is greatly sped up because your creditworthiness has already been checked earlier. The required funds can be obtained in as little as 30 minutes*.
  • Minimal to no documentation requirements: Some customers do not even need to submit any documents such as their income proof or PAN card to get our loan.

*Terms and conditions apply.

Is personal loan better than a credit card?

Should you choose a credit card, or a personal loan depends on many factors. Both options have their pros and cons. If you need a higher loan amount, longer repayment tenure, and lower interest rates, an Insta Personal Loan may be the right choice over a credit card.

Is a credit card more expensive than a personal loan?

The interest rates are usually lower on personal loans than on credit cards. However, these factors differ from lender to lender. It is advisable to check the terms and conditions carefully before opting for any form of credit.

Is a loan on a credit card considered as a term loan?

Term loan provides funds with a fixed repayment duration. A loan against credit card limit may work like a term loan, however, credit card loan may not have a flexible repayment period.

Can I take a loan from a credit card?

Some lenders offer the facility that allows you to take a loan against your credit card limit.

Should I take out a personal loan to pay off credit cards?

It depends on several factors, including your repayment capacity. Typically, outstanding credit card balance attracts much higher interest rates than personal loans. In such cases, it may be advisable to consider a personal loan. It is important to consider all available options before you decide on how to proceed.

Should I pay off my credit card or personal loan first?

Deciding which debt to pay off first depends on several factors such as the amount, interest rates, applicable charges, and more. Ideally, it is advisable to keep a healthy debt-to-income ratio before you borrow funds.

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*Terms and conditions apply