Choosing the Best!

Well, it depends on your plan of action and requirements. Whether you need cash or just a card to pay your bills. You need funds in your bank account or a card with a limit to spend from.  

Both instant loans and credit cards are financial tools that help you get funds. A credit card allows you to swipe your card and avail the benefits which make it different from the traditional loans and lending process. Whereas an Instant loan is an advanced form of personal loan where you can borrow online with just a few clicks on your mobile or computer. 

However, both options make it convenient to borrow as they come with lots of benefits. But choosing one among the two depends on your requirements and affordability.

To differentiate well and choose the best one, you will have to draw a comparison based on our needs and situation. However, you can’t afford to ignore the features of both instant loans and credit cards to select one. Here we are highlighting features of both to make your comparison easier.

  • Documentation: An instant loan requires only a basic documentation process which includes providing your ID card, Address proof, and latest payslips. The process is completely online hence there is no physical documentation. You just need to upload the documents on the lenders portal or it can even be sent through the mail. However, the credit card does not need much documentation and if availed from a bank of which you are already an existing customer then there is no documentation required.
  • Interest: Here comes the most important factor which can’t be ignored at any cost. Interest charged for your borrowing is the most important factor to be considered while availing any loan whether it be an instant personal loan or a credit card. Usually, an instant personal loan is offered at 10 to 24% of interest rate( depending on the borrower’s profile) while availing a credit card can cost you more as the interest charged on using a credit card ranges from 16 to 32% depending on your provider. However, there are always offers going on for credit cards, so to avail extra benefits try to avail it in the offer period as it may get you the card on the flat interest rate.
  • Unsecured Loan:  Both the instant personal loans and credit cards are unsecured and there is no collateral or security involved at any stage. but ss these are unsecured the terms & conditions for both in case of non-repayment & delayed payments are a bit different from the traditional loans. Hence you need to sign the loan agreement after understanding the fine prints in detail.
  • Tenure: There is no fixed tenure period for a Credit card loan as you can borrow and repay multiple times when within your credit limit. But in case of an instant personal loan or online loans, the tenure period ranges from a minimum of one year to a maximum of five years. 
  • Loan Amount: A credit card comes with a credit limit which can be considered equivalent to the loan amount. A cardholder is allowed to use funds within that particular limit without any restriction. Most importantly the interest is charged only on the money used. 

But in case of an instant loan, it works like a normal loan and you get the loan amount depending on your repayment capacity.  In general, this loan amount can be huge as compared to the credit limit of a credit card.