Personal loans can be given to any of the borrowers who need the money and require spending money for any of the purposes. The loans taken should be repaid on time by the borrower to avoid penalty being charged on the loans. The bank requires proper documentation and also proper credit score and also proper financial stability. The borrower can apply online for the personal loans application through the mobile banking app or website portal. In the case of the online application, the amount can be credited on an immediate basis by the bank into the bank account of the borrower. The personal loans are very easily being approved by the bank as the amount required to be disbursed for the personal loans is less. The loans can be taken from any of the lenders by the borrower. The loans if repaid on time can help the borrower improve their CIBIL score thus making availability for future credits. The loans taken by the borrower can be made available for the tenure of 5 years. The loans taken can be utilized for any of the purposes according to the requirement of the individual.
Personal loans help in increasing the personal expenditure of individuals. Many people can spend thoughtlessly on many of the purchases even while not having a sufficient amount of money. The personal loans taken by the borrower helps spend money even while not having a sufficient bank balance. The bank extends loans only after doing the background verification check of the credit history of the borrower. The loans are useful for the borrower to satisfy their own needs and for the major expenses. Also, financially poor people or the ones who are needy can avail of personal loans from the bank depending on the need up to Rs.25 lakhs for personal expenditures. Personal loans also help individuals utilize the funds during a medical emergency or for costly medical treatments. Banks charge interest rates of 9-15% per annum to the borrowers. The interest rates for personal loans are higher than that of home loans and car loans. There is also no income tax benefit being applicable for the borrower through the income tax department as there is no such provision being made by the government of India for the savings on income tax for the personal loans. The target segment for the personal loans is mostly the ones like lower or average income group people.
The choice between Personal loans &Credit cards
A credit card is easy to use and the case of an international credit card can be used at any of the locations across the world.
Credit bills can be converted to a maximum of 3 months EMI or else 6 months EMI installments for the bill payment.
Credit cards once allotted can be used up to the maximum limit of Rs. 5 lakh. However, the actual limit set depends upon the type of credit card being extended by the bank.
A credit card credit limit is a maximum of 60 days before which the bill needs to be paid, failing which the borrower may be charged with a penalty.
The credit score required for the credit card is 700 points & above.
A credit card is issued based on the income and credit score of the borrower.
Credit cards can be issued and taken by any bank depending on the borrower’s choice.
Personal loans can be easily availed by giving the application to the bank. The interest rates charged are in the range of 9-14% per annum.
Personal loans can be taken from any of the lenders of the borrower’s choice.
Personal loans can be issued by the NBFC as well along with the banks for the personal loans.
Personal loans can be taken with a maximum limit of up to Rs25 lakh.
Personal loans can be repaid up to the tenure of a maximum of 5 years. Thus the tenure approved is higher than that of the credit card.
Personal loans can be processed based on the current income of the borrower and also based on the CIBIL score.
The minimum score required for personal loans is also 700 points.
A higher credit limit can be obtained in case of the personal loans as the bank offers a much higher limit than a credit card.
We can conclude that personal loans are better than credit cards as the limit approved is higher than the credit card. The loans can be taken from any of the banks and the maximum tenure approved is 5 years for personal loans while that for credit card bills can be converted to a maximum of 6 months EMI. Thus the personal loans are more recommended than a credit cards.