Whether or whether they have ever used one, the majority of people surely understand what personal loans are. What about credit card loans, which are becoming a more popular personal loan substitute? Credit card holders who are eligible for both credit card loans and personal loans may find it challenging to decide between the two lending options.
Don’t worry if you’re unsure whether to apply for a personal loan or a credit card loan. By contrasting the two in the comparison that follows, you can determine which loan choice is best for you. This will provide you the knowledge you need to make an informed decision and submit an application for the loan that is ideal for you.
Loan eligibility
When deciding whether or not to offer a personal loan, lenders consider the borrower’s credit history, monthly income, employment history, and other factors. After applying, you can check the Tata Capital Personal Loan application status using the website or mobile app.
When a loan is secured by a credit card, the credit card issuer determines which cardholders are eligible for a pre-approved loan. This decision is heavily influenced by the type of card, the cardholder’s purchasing patterns, and their payment history. A credit history is not necessary to use a credit card to borrow money, but it is for personal loans.
The current Tata capital personal loan interest rates
When qualifying standards are taken into account, personal loan interest rates could range from 10-12% to 24-26% depending on the lender and the borrower’s credit history and score. Secured loans for credit card debt frequently have interest rates that are 1% higher than personal loans. Therefore, you should pick a personal loan if you can wait simply a week for the loan distribution.
the price and duration of the processing
When compared to other types of credit facilities, a loan secured by a credit card often closes in one of the shortest amounts of time. As soon as a loan application is submitted, the money may be withdrawn from the account. Current cardholders who match the requirements can avoid having to present physical documentation because credit card loans are already pre-approved.
Additionally, some card issuers promise that the funds for these loans will be disbursed right away. Credit card customers can apply for a loan by phoning customer care or completing an online form through internet banking if they meet the requirements. For credit card loans, processing fees could be between 1 and 2.5 percent of the entire loan amount.
The personal loan applicant must demonstrate their identification and eligibility by providing pay stubs, individual tax returns, and other financial documents. Due to the lengthy document verification process, personal loans are normally approved between two and seven days after receiving the loan application. Online updates of Tata Capital Personal Loan application status
are easily available. Even though many lenders waive them over the holidays or during special campaigns, processing fees can reach up to 3% of the loan amount.
The sum of the loan
The maximum amount that may be borrowed using a credit card as collateral is determined by the loan limit, which is set by the card issuer. As a temporary cap on the cardholder’s credit limit, the approved loan amount may reduce their ability to make purchases. The credit limit will eventually be paid off if the borrower continues to make the required regular monthly EMI payments. Even after the card’s credit limit has been surpassed, some credit card firms have started offering customers loans in the form of credit cards.
A personal loan normally has a loan amount between 50,000 and 20–25 lakh rupees. Depending on the borrower’s qualifications, some lenders assert that they may even be able to provide personal loans up to Rs 25–40 lakh. Never forget that the real amount of a personal loan depends on a number of elements, such as the borrower’s capacity to repay the loan and the chosen payback time.
Time required to repay debt
The normal repayment time for a personal loan is between one and five years, while the majority of lenders would extend the maximum payback period up to seven years. Remember that you can use a loan status tool to monitor the Tata Capital Personal Loan application status, just as you can use an online emi calculator to calculate the right emi by choosing the right term.
The length of a credit card loan, however, might range from six months to five years.
Advance payments (prepayment)
Depending on the lender, prepayment penalties for personal loans could range from 5 to 6% of the entire borrowed amount. Prepayment penalties are not used by banks, especially those in the public sector, because personal loans are usually provided at variable Tata capital personal loan interest rates. Remember that prepayment penalties cannot be applied on retail loans with variable interest rates under the recommendations of the RBI.
If you want to avoid worrying about whether your application was approved or denied, don’t forget to check the Tata Capital Personal Loan application status when you’re finished.
When credit cards are used as collateral for loans, credit card issuers commonly levy prepayment penalties of up to 3% of the total loan amount that is still outstanding. Before selecting the type of loan and the lender, prepayment costs must be taken into account along with other crucial elements such as Tata capital personal loan interest rates, tenure, loan amount, processing fees, and so forth. This is due to the fact that they have the potential to eat up a sizeable chunk of the overall interest savings from prepayment. This is due to the possibility of reversible prepayment penalties.
Besides these two loans, there are other loan options too that you can consider, such as gold loan, LAP (loan against property), loan against securities, loan against insurance, etc. So consider these options as well when you are contemplating the idea of applying for a loan when needed.
