Browsing through the list of financing options can be confusing for a borrower.
Even more so, when you do not consult a financing counselor or it is your first time while using such services.
But two forms of financing alternatives, which people are familiar with is a credit card loan and an unsecured personal loan. But do you actually know what the difference is between both these services?
If not, then this article will give you some great insights into the various factors related to an unsecured personal loan as well as a credit card loan.
Credit card loan features
- Usage
When it comes to the usage of a credit card, there is no particular limit whatsoever. This means you can use the card for any expense that you consider necessary. However, the expense should be within the limits of your credit card loan.
- Eligibility
Every borrower can not avail credit card loans. This particular financing service is only offered to selected customers who have a good credit history. Still, it does have the facility of instant approval for those selected customers.
- Interest rate
The interest which is generated on loan against your credit card is usually higher. However, it is different for every bank and financing institution. Moreover, there is no base rate like in the case of an unsecured personal loan.
- Loan amount
The amount that you can borrow against your credit card loan depends on the limit of your card itself. The loan amount cannot be higher than the limit of your card.
- Tenor
The repayment tenor of a credit card loan follows an EMI system similar to an unsecured personal loan. But while you are repaying the EMIs, you will not be able to utilize your credit card to its full capacity.
Unsecured personal loan features
- Usage
Similar to a credit card loan, an unsecured personal loan can also be used for any expenditure. Some of the common examples are medical treatments, wedding expenses, educational expenses, business expenses, and more.
- Eligibility
The eligibility criteria for personal loans require a background check for the borrower. It means the financing institution or bank will conduct a creditworthiness check. They will do that to understand your repaying capability.
- Interest rate
An personal loan is considered to be an expensive financing alternative. Its interest rate can range anywhere from 11% per annum to 30% per annum. You can know more about this when you apply for personal loan online. If you are confused for which type of loan will be suitable for NRI, you can surely analyze which is the best NRI personal loan in India.
- Loan amount
The amount that you can apply for, in case of unsecured personal loan is extensive. It begins from a few thousand rupees and goes up to a few lakh. It all depends on your requirement and credit history.
- Tenor
The tenor of an unsecured personal loan is also flexible enough to provide borrowers convenience. It can be anywhere from 1 year to 5 years. Besides, you can even learn about how to calculate personal loan EMI based on the tenor, through multiple online channels. One of such tools is the personal loan EMI calculator.
