A personal loan and a credit card are two of the most popular sources of credit when it comes to meeting miscellaneous expenses. However, while many people think of them interchangeably, they both can have very different implications on your financial standing, credit score, and overall peace of mind. When it comes to personal loan vs credit card, the former comes out with a bigger list of benefits.
Here are some scenarios wherein personal loans could be more useful than a credit card:
If you require immediate cash in a short duration of time
For situations that may require a considerable pool of money at relatively shorter notice, such a loan can be helpful. Personal loan eligibility criteria are simple, and with a good credit score and steady income, you can secure a sizeable loan in up to 72 hours. While credit cards too offer instant monetary aid, there are limitations. If your need is more than your credit card limit, you can find yourself in a tight spot. However, you can apply for personal loan of up to Rs. 25 lakhs (may vary depending on the lender) and cover a broad spectrum of expenses.
If you need more time to repay your debt
Credit cards do not offer a long settlement tenure, and you cannot pick a timeline suited to your needs. You can be asked to pay the minimum amount due the very next month. If you do not have a steady source of income to clear these dues in time, you could end up paying hefty penalties. Personal loans, on the other hand, offer relaxed tenures.
Using a personal loan emi calculator, not only can you calculate your EMIs but can also get an idea about the ideal tenure. This way, you can settle the loan in a period most convenient to you.
If you want to consolidate your debt
Personal loans can be used to consolidate all your debts under one instrument. If you have credit card bills with a high rate of interest and other forms of debt, you can use such a loan to consolidate them all. With an affordable personal loan EMI, you might find it easier to clear your dues.
If you want to maintain a good CIBIL score
Mounting credit card debt can negatively impact your credit score. A low score reflects your financial instability and incredibility to settle debts on time. However, an instant personal loan can help you build your credit score. With a structured settlement plan, personal loans help you repay your debt and let you establish your trustworthiness as a reliable person.
If you struggle to manage your money efficiently
Financial discipline is a great attribute, but not many people can keep up with it. If you are one of those people who lack the discipline, you can apply for personal loan. This will ensure you have a structured EMI plan in place, so you do not falter.
Personals loans can be useful in many scenarios. If you are in need of some urgent funds, you can check out personal loan by Tata Capital, a reliable name in the industry.