A personal loan, meanwhile, is a collateral-free option that you can use for any purpose, without any restriction, up to the sanctioned amount. This is ideal if you need funds for big ticket purchases or urgent needs. For instance, you can fund the tuition fees for your children, plan a family vacation abroad, manage the expenses of a wedding in your family or a home renovation project. A personal loan could also serve as a debt consolidation loan, as it can help you pay off multiple debts that you may have.
Disbursal of money
In the case of a credit card, the issuer grants you a credit limit from which you can make several payments until you have exceeded the limit. On the other hand, the lenders of a personal loan give a lump sum disbursement and charge interest on the entire amount. Some financiers – such as Bajaj Finserv – offer a versatile personal loan that allows you to make several withdrawals from your limit and charge interest only to the amount used. This way, you can save more over EMIs.
Repayment of money
The issuer of a credit card charges you every 25 to 31 days for the amount you use. You do get a grace period of 20 days where there are no interest payments for your fees. When you fail to pay your fees at the end of these 45-51 days. Your remaining balance is subject to the prevailing interest rate.
Inversely, if you pay bills on time, you don't have to pay interest. Your cap has been replenished to that degree. Know that the interest rate on the credit card is typically very high, particularly when compared to loans, so schedule your monthly payments on time to prevent a debt trap.
