Almost everyone is aware of the widespread appeal of unsecured loans for personal use. But what about the alternative to personal loans that has just emerged: credit card loans? When faced with the choice between a credit card loan and a personal loan, cardholders often find themselves indecisive.
Here’s a look at the similarities and differences between the two loan programmes so you can make an informed decision:
Eligibility for a Loan
Lenders evaluate numerous criteria before deciding whether to extend credit, including a borrower’s credit history, regular income, and employment history and profile. Bob personal loan application status updates are also available online or via mobile app.
However, credit card issuers have the last say over which cardholders can get pre-approval for a loan backed by their card. The cardholder’s spending habits, repayment record, and the type of card all play significant roles in this determination. Borrowers need an established credit card relationship with the card issuer in order to be approved for a loan secured by that card and get to use the bob credit card status tool later on; however, a personal loan applicant need not have an established relationship with the lender in order to be approved for a loan.
The current interest rate
Interest rates for Bob personal loan typically fall anywhere between 10% and 24%, though this varies widely by lender and borrower characteristics. Credit card secured loans normally carry interest rates that are around 1% higher than those associated with unsecured personal loans. Therefore, if you can wait for the loan disbursement for no more than a week, a personal loan is the best option.
Time and money spent on processing
A credit card loan is typically one of the quickest forms of loans to process, even when compared to those secured by other types of credit. After applying for a loan, the funds are often available for withdrawal within hours. Current cardholders who meet the qualifying conditions may not need to provide physical verification because loans against credit cards are pre-approved. Furthermore, instantaneous funding is a feature offered by some card issuers for these types of loans. If a credit card holder is qualified for a loan, all they have to do is fill out an online application through their bank’s website or by getting in touch with customer service. Processing costs for credit card loans might reach 2.5% of the total loan amount, but remember that you also get to use the bob credit card status tool to remain up to date about your application.
In the case of personal loans, the applicant must present pay stubs, individual tax returns, and other evidence establishing the borrower’s identity and eligibility before the loan proceeds can be disbursed. Bob personal loan is usually disbursed between two and seven days after the loan application is submitted due to the time it takes to verify the applicant’s information. You may keep tabs on the progression of your personal loan application by checking its status online, just like in case of credit cards wherein you check bob credit card status. A lender may charge a processing fee of up to 3% of the loan amount; however, many lenders will waive this price during the holidays or as part of a special promotion.
Quantity of the Loan
The credit card issuer sets the upper limit of amount that is possible to be borrowed using the card as security; this is known as the loan limit. Although the approved loan amount will temporarily block the cardholder’s credit up to the amount of the loan, the limit will be unblocked in due time so long as the borrower keeps making the necessary monthly payments on the loan’s EMIs. Some credit card providers have begun providing borrowers with loans in excess of the card’s credit limit.
However, the average personal loan amount is somewhere between Rs. 50,000 and Rs. 20,000, and some lenders even claim to be able to offer up to Rs. 40,000,000,000. Keep in mind that the factors such as the borrower’s ability to repay and the chosen loan period will largely determine the approved amount of a personal loan. Keep in mind that interest rates for personal loans can change based on the amount borrowed.
time period for loan payments
In most cases, a borrower will have between one and five years to repay their Bob personal loan; however, certain lenders may provide payback terms of up to six to seven years. Personal loan status tools are available so that you may track the progress of your application and know when it has been approved or denied, just as you can use an online emi calculator to determine the appropriate emi by selecting the appropriate duration.
Credit card loans, on the other hand, might have repayment terms anything from six months to five years, along with facility of online bob credit card status checking tool.
Fees for prepayment
Personal loan prepayment fees could be as high as 5% of the loan total, however this varies per institution. However, as banks often offer personal loans at variable Personal loan interest rates, financial institutions, especially those in the public sector, do not apply prepayment penalties. Remember that the RBI has recommended that banks not levy prepayment penalty/fees on retail loans involving variable interest rates. After applying for a personal loan or credit card, you should check bob credit card status or that of the loan to see if your application was accepted or rejected.
Credit card issuers commonly charge prepayment fees of up to 3 percent of the outstanding loan balance when a credit card is used as collateral for a loan. It is important to compare prepayment fees along with other crucial parameters such as applicable interest rates, payback tenure, required loan amount, processing charges/ fees, and so on before deciding on the type of loan and the lender, as they can consume a big chunk of portion of the total interest cost savings otherwise generated upon making the prepayment. This is due to the fact that prepayment fees can be prohibitive.