Differences between a personal loan and a credit card loan

Explore the key differences between these two loan options, including interest rates, loan amounts, and repayment terms.
Differences between a personal loan and a credit card loan
5 min read
04 April 2024

In today’s fast-paced world, there often comes a time when unforeseen expenses or personal aspirations necessitate a financial boost. It is during these moments that individuals explore various avenues for securing funds. There are several credit options available that can help you manage your expenses. These include personal loans, credit card loans and more. Both these options serve as lifelines in times of need but understanding the distinctions between them is crucial for making informed financial decisions.

Credit card loans

A credit card loan, often referred to as a cash advance, allows cardholders to borrow money against their credit limit.

Personal loans

A personal loan is an unsecured loan obtained from a financial institution. It allows borrowers to receive a lump sum upfront, which is repaid over a set period with a predetermined interest rate. With a personal loan, you can get access to high-value financing that can help you manage big and small expenses. Bajaj Finserv Personal Loan can help with funds of up to Rs. 40 lakh within just 24 hours* of loan approval. Read all about the features of our personal loan.

Credit card loans vs personal loans

Interest rates: Credit card loans come with higher interest rates as compared to personal loans. Considering that personal loans have lower interest rates, they emerge as a more cost-effective borrowing option.

Personal loans from Bajaj Finance are available at competitive interest rates. Learn about our interest rates, fees, and charges.

Loan amount: The borrowing limit of a credit card loan is usually depending on your credit card limit. Your credit card limit is usually defined by your lender basis your income. However, if you choose personal loans, you can get access to a huge sum of amount that can help in managing your big-ticket expenses. For example, Bajaj Finance offers a high-value personal loan of up to Rs. 40 lakh. You can choose either of these loan amounts depending on the amount of funds you need. Use our personal loan EMI calculator to estimate your monthly instalments by simply entering the tenure, loan amount, and interest rate. This will help you know your monthly outgo and plan your repayment efficiently.

Repayment tenure: Usually, a credit card loan comes with a shorter repayment tenure of up to 60 days while personal loans come with a longer repayment tenure. This long repayment period of a personal loan allows you to repay the loan amount in affordable monthly instalments. For example, you can choose a tenure of up to 8 years to repay your Bajaj Finserv Personal Loan comfortably.

Lenders: If you opt for a credit card loan, you have to borrow the loan from the same lender who has issued the credit card. However, with personal loans, you have the option to shop around and choose the lender that provides you with the most favourable terms and conditions.

When to opt for a credit card loan?

The choice depends on your funding requirement and repayment capacity. If you need a smaller loan amount and can repay it over a short period of time, you can choose a credit card loan.

When to opt for a personal loan?

Personal loans can be an ideal solution if you have to manage big expenses and need funds at affordable interest rates. Check your eligibility for our personal loan.

Credit card loans or a personal loan – which is better?

In the financial landscape, credit card loans and personal loans serve distinct purposes, each with its own set of advantages and disadvantages. Choosing between them depends on the specific needs, financial situation, and the nature of the expense at hand. It is crucial to evaluate the desired amount of funds, your ability to repay, and the timeframe involved. Based on these considerations, you can select the type of credit that aligns best with your financial situation.

Bajaj Finance offers personal loans that come with simple eligibility criteria and minimal documents. With features like the flexible repayment tenure option, you can spread the loan amount over a period of up to 96 months and repay easily in small monthly instalments.

Apply for our Personal Loan.

Disclaimer

While care is taken to update the information, products, and services included in or available on our website and related platforms/ websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/ service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/ service document and applicable terms and conditions. In case any inconsistencies are observed, please click on reach us.

*Terms and conditions apply