You can either opt for a credit card loan or a personal loan when you need to acquire funds. However, you might get confused while choosing between a personal loan or a credit card loan. In such a case, knowing the advantages and disadvantages of both credit cards and personal loans is essential.
Specialists suggest taking out a credit card loan if you’re under short-term debt. On the other hand, if you need more time to repay the debt incurred, it would be best if you take out a personal loan. In such situations, you can avail of the best personal loans with an attractive CIBIL scores. You can easily access various websites and get your CIBIL score check before availing of a personal loan. Your application will be approved if you have a minimum CIBIL score for a personal loan.
Ultimately, whatever you choose comes down to the interest rate imposed on that particular loan. Going for a loan that is more cost-effective will be more beneficial for you. Thus, we will break down some of the vital pros and cons of both credit card and personal loans to make it easier for you to choose the correct option.
Personal Loan vs. Credit Card Loan
Personal loans offer liquid funds to you when you require them to achieve an urgent financial need. Personal loans are available at a fixed interest rate, known as the personal loan interest rate. Many factors influence the interest rate on a personal loan. One of these is your credit or CIBIL score. You can get your CIBIL score checked to avail the best personal loans. You will require 750 as the minimum CIBIL score for a personal loan.
On the other hand, credit card loans are often readily available. However, they might require higher rates of interest. The repayment of a credit card loan is more flexible than the same as a personal loan. It varies on your interest rate and balance. You can also access many reward programs and schemes by taking out a credit card loan. Getting your CIBIL score checked also becomes vital to get approval for a credit card loan.
To avail of either of these types of loans, it is crucial to check your CIBIL score. Having a low CIBIL score will be disadvantageous for you. Most lenders prefer a minimum CIBIL score for a personal loan. Furthermore, a good CIBIL score will offer you attractive deals on personal loans and credit cards.
When Is Taking out a Personal Loan Ideal?
A personal loan is ideal when consolidating your debt or making a big purchase. Personal loans usually have low-interest rates, and you can pay the interest in monthly EMIs. Personal loans are suitable when you must pay a lump sum for many things at once. There are many ways to avail of a personal loan, such as having a high CIBIL score. You can always check your CIBIL score online and get a free CIBIL report. However, personal loans might be difficult to avail sometimes.
When Is Taking out a Credit Card Loan Ideal?
Taking out a credit card loan is ideal when you need some liquid funds urgently or make a small purchase. They are easier to avail of than personal loans. Credit card loans are ideal for short-term debts. If you need to attain your monetary needs instantly, you should opt for a credit card loan. You can also avail many attractive schemes and rewards through a credit card loan. However, credit card loans tend to have a higher interest rate than personal loans. However, they are pretty flexible in terms of repayment.
Conclusion
It can be quite challenging to pick a better option between personal or credit card loans. It mostly depends on your immediate financial situation and what you might need and prefer. To facilitate your decision-making, it is essential that you are aware of the ideal time to take out either a personal or credit card loan. It is also crucial to check your Minimum CIBIL score for personal Loan. If the difficulties persist, you can always consult a financial advisor.