There are times in life when you require immediate financial aid, be it a medical emergency, an urgent purchase, or keeping funds on hand. In these times, opting for quick financing is a wise decision.
The two most popular choices for quick financing are credit cards and instant Personal Cash Loans, as they are both hassle-free and fast solutions. But which option should you pick?
Both instant Personal Cash Loans and credit cards have their benefits and are convenient to acquire, but these should be compared before making a choice. This article distinguishes between the qualities of these two financing options to help you identify which option is the right choice.
Difference between Instant Cash Loan and Credit Card
|Criteria||Instant Cash Loan||Credit Card|
|Collateral & Disbursement||An Instant Personal Cash Loan is unsecured and thus requires no collateral. In this option, you will receive cash in hand.||A credit card is also unsecured. However, you will not receive cash. Instead, the card will allow you to access a line of credit.|
|Intention||Instant Cash Loans are for large payments, such as medical expenses, education purposes, travel, vacation expenses, etc.||Credit cards are commonly used for both large and small payments, like daily expenses.|
|Convenience||Instant Personal Loan applications are quick and easy. In addition, the disbursed amount is in cash, which is convenient and accepted everywhere.||Credit cards are easy to carry. Yet, as credit cards can only be used with vendors who accept them, they may become inconvenient at cash-only establishments.|
|Debt Repayment||Cash Loans can be repaid through EMIs. It is also easy to determine the EMI in advance with the help of an online personal EMI calculator and prepare for loan payments.||Credit card balances accumulate throughout the month, and the minimum payment has to be paid at the end of the billing cycle. This payment consists of a portion of your debt plus interest, making credit card repayments impossible to plan ahead of time and unpredictable.|
|Borrowing Limit||The amount of an Instant Personal Cash Loan depends on your ability to repay it. Depending on your salary and available funds, the amount can be sizable.||Credit cards have a credit limit, which is often two to three times your monthly salary.|
|Chargeable Interest||Interest is chargeable on the entire sum of money borrowed in a loan, irrespective of how much has been utilized. Furthermore, the interest rates for Instant Personal Loans are competitive.||Only the amount charged on the credit card is subject to interest. However, the interest rate can be higher than that of a personal loan, especially in the case of delayed or partial payments, which incur high-interest rates on the outstanding balance.|
|Application||Instant Personal Loan applications have become easy and convenient with the help of online banking. All you need to do is upload documents like your identification card, proof of address, and salary statement to the lender’s online portal and wait for approval. Additionally, it is also possible to apply for a Personal Loan in a bank you are not an account holder.||Credit card applications require less paperwork, especially if you are already a bank’s existing customer. But, you can also apply for a credit card without having a bank account. Your credit card eligibility is determined by your income, employment status, and credit rating. However, applying for a credit card at a bank where you have an account speeds up the approval process as less documentation is required.|
|Tenure||An Instant Loan’s tenure may range from 3 months to 5 years, depending on the amount borrowed. This option is preferred when borrowing over a longer time frame.||A credit card loan has no set tenure period. Instead, you can borrow and repay the credit within your predetermined limit multiple times.|
While both credit cards and instant Personal Cash Loans are excellent options for financing your expenses, an Instant Cash Loan is the better option if you require a substantial credit amount and can repay it over some time. Instant Personal Cash Loans also offer an added benefit of safety compared to a credit card, where there is the risk of misplacing or damaging the card.