When you need urgent funds, you do not see which financing alternative you are using. However, choosing the right one can make a huge difference in your financial situation. One of the most common questions that people have is regarding the difference between a credit card and personal loans.
A lot of people confuse them to be similar to each other, which allows them to make the wrong choice sometimes. If looked carefully, then you will be able to see that there are certain visible differences between personal loans and credit cards.
In today’s article, we are going to share with you five such differences that can help you make a sound decision regarding your financing needs. Hence, continue reading!
1. Interest rates
One of the first differences that can be seen between both the services is regarding its interest percentage. Personal loan interest rates in India are quite affordable when compared to credit cards. Even the lower limit of the credit card interest rate is comparatively high then of a personal loan. Moreover, you can shop around for the best personal loan interest rates without any problem. However, when it comes to credit cards, there are limited options since the interest bracket is comparatively small.
2. Amount disbursal
The next thing on our list of comparison is regarding the amount disbursal policy. When it comes to a credit card, it follows a revolving disbursal. However, in the case of personal loans, the amount is transferred to the borrowers account in a lump sum. Even though credit card revolving disbursal is not a negative thing; it can sometimes be good to have lots of money at once. It is especially to deal with those for big expenses that cannot be managed with small instalments.
3. Top-ups
Top-ups can also be called cash advances, which is available when you choose a credit card. But when it comes to personal loans, the same is not always a possibility. It completely depends on your chosen financing firm and its policies. Therefore, it can sometimes be a struggle to choose a service because personal loan interest rates are low and then not able to enjoy cash advances. Overall, the choice depends on your requirement.
4. Borrowing limit
The borrowing limit of credit cards is usually not that high. Apart from this, the expenditure limit is also in place with some companies. However, on the other hand, when it comes to personal loans, you do not have to worry about any limitation whatsoever. It gives you free-range usage, which is why you will be able to invest or spend your money as and when you like. This goes for services with low personal loan interest rates as well.
5. Tax deductions
The tax deduction is a big question for everyone when they are borrowing funds or using a financing tool. Even though direct tax deduction with personal loans is not possible, there are certain situations when it can be available. One case is in the form of cost of acquisition of assets during its sale. However, with credit cards, there are no tax deductions available which can prove to be a negative for some users.
Bajaj Finserv provides a number of different financing services to customers. The list includes options like personal loans, business loans, home loans, and more. They even have numerous pre-approved deals available for borrowers. These offers can be utilized to reduce the loan processing time and make it less complicated.
If you want to unlock your pre-approved personal loan offers, then you can start by submitting your basic personal information like name and mobile number.
