Choose the Best: Instant Cash Loan VS Credit Card

20 Oct 2021 5 min read
Personal Loan: Instant Cash Loan Vs Credit Card : Which is The Better Option for You?

What is your strategy for getting cash or credit when you don't have enough money? You have the option of using your credit card or taking out a loan the traditional method. You have two choices: either take out a credit card loan or an Instant Cash Loan. To choose between the two, you'll need to conduct a comparison based on our requirements and circumstances. 

1. Loans for Individuals 

A personal loan is an unsecured loan used for a variety of reasons, including medical expenses, large purchases, vacations, and even debt consolidation. Personal loans have a high interest rate because they are unsecured loans. 

Read More: Secured vs. unsecured Loan

2. Loan with a Credit Card 

A credit card loan is a pre-approved loan that doesn't require any paperwork. It is the quickest way to get unsecured credit. A portion of your credit card limit that has not been used is given as a loan in this sort of loan. A credit card loan is not the same as a cash withdrawal. 

Credit Card Vs Personal Loan  

Although a personal loan and a credit card loan appear to be comparable, they are not identical. 

  • Documentation: A personal loan requires a large amount of paperwork for approval and might take several days, whereas a credit card loan does not require any documentation and is much faster to obtain. 
  • Interest Rate: The most crucial factor to consider when taking out a loan is the interest rate. Person loans typically have a 13-22% interest rate, while credit card loans have a 10-18% interest rate. Another important consideration is that credit card loans have fixed interest rates, whereas personal loans have declining balance rates. 

In the case of flat-rate loans, the interest is calculated on a monthly basis. 

In the case of flat-rate loans, monthly interest is calculated on the original loan amount and remains constant throughout the term, even if the principal amount reduces. The interest outflow on a declining balance loan, on the other hand, lowers when the principal is paid. 

  • Unsecured Loan: Both of these loans, however, are unsecured, and no collateral is required. 
  • Repayment Tenure: Credit card loans can be taken out for shorter periods, although personal loans are often for longer periods. 
  • Loan Amount: A credit card loan is a good alternative if you only need a small loan, whereas personal loans allow you to take out a large loan. 

Difference between Cash Loan Vs Credit Card  

The following are the key differences between credit cards and personal loans: 

Basis of Difference 

Credit Card 

Personal Loan 

Eligibility 

Only a limited number of credit cardholders are eligible. 

Non-customers of the bank may also apply.  

Procedure for Borrowing 

By accepting or applying for a pre-approved offer made by the bank. 

By submitting an application with supporting documentation to a bank or financial institution. 

Disbursement 

If you're with the same bank, it'll be credited directly to your savings or current account, or you'll get a check. 

Amount paid in one single sum to the customer's savings or current account or by check 

Approval Time 

Within 24 hours 

3-5 business days 

Repayment 

EMIs will be charged to your monthly credit card statement for the duration specified. 

As EMIs to the bank for a specified tenure 

Tenure 

From 1 to 5 years 

From 1 to 5 years 

Borrowing Limit 

Up to the provider's pre-determined maximum 

The bank will compute it based on confirmation of income. 

Interest Rates 

Higher than personal loans; varies from bank to bank and may also vary from customer to customer.  

Based on the customer's income and credit history should be 10.50% and more.  

Documents 

There are no further documents needed. 

Proof of identity, address, and income are all necessary. 

When to opt for a Credit Card Loan?  

When you need money, you should take out a credit card loan. With the help of these points, you can get more information:  

  • When you're in a hurry to get money, 
  • When you only need a modest amount of something 
  • When you are unable to obtain a personal loan 
  • If you can receive a better interest rate than a personal loan, this is a good option. 

Eligibility of Instant Cash Loan  

Credit card eligibility criteria vary not only from one issuer to the next but also between different card variations offered by the same issuer. While basic requirements such as age, place of residence, source of income, credit score, and so on are likely to remain the same across card varieties, the minimum income criterion is the significant differentiator in the case of credit cards. Card providers have defined income qualifying criteria for each card they offer based on the type of card, its benefits, and the annual fee. 

Documents for Credit Card 

The paperwork requirements differ from one issuer to the next. The following are some of the important documents needed to apply for a credit card

  • Passport, PAN card, driving license, voter ID card, Aadhaar card, and employee identity card in the case of government personnel are all acceptable forms of identification and signature proof. 
  • Bank statement, rent agreement, voter ID card, ration card, passport, driving license, telephone/electricity/water/credit card bill, or property tax bill are all acceptable forms of proof of address. 
  • Voter ID card, Secondary School Certificate (class 10), birth certificate, passport, Aadhaar Card, pension payment order, or LIC insurance receipt are all acceptable forms of proof of age. 
  • Proof of Earnings for Salaried Individuals: 
  • Salary account, last three months' payslips. 

When to opt for a Credit Card Loan?  

When you need a personal loan, you should:  

  • Need a loan for a larger sum of money. 
  • The loan may take up to a week to be approved and disbursed. 
  • You can compare different offers before deciding on a loan. 
  • You must pay a company or someone who does not accept credit cards. 

Eligibility Criteria of Cash Loan  

Here are some generic eligibility checks for Instant Cash Loans:  

  • The company's headquarters should be in India. 
  • To obtain the loan, security must be provided. 
  • The business can be a sole proprietorship, a partnership, a private limited company, or a public limited company. 
  • The company should have been in business for a minimum of three years. 
  • The bank and the company should have a solid working connection. 

Essential Documents Required for Instant Cash Loans  

Before availing of the loan, there must be some documents required to submit, which are as follows:  

  • The application form has been completed. 
  • Information about the company may be found in the corporate profile. The company's offerings in terms of goods and services. 
  • Proof of Residence: Bills for electricity, lease agreements, and water bills 
  • Original ownership papers of the property in the case of a mortgaged property. 
  • The financial statement for the previous two years. 
  • Tax returns for the last two years. 

Conclusion  

The main aim of the cash loan and credit card is to provide funds to the users when required. A cash credit loan, sometimes known as a cash loan, is a type of line of credit provided by banks to a business or firm in exchange for some form of collateral. Also, you need to check the credit score of the loan. While many banks have their names for the product, the corporation can keep withdrawing money until they hit the bank's limit. The corporation can utilize this money to purchase raw materials, merchandise, equipment, and other important stuff. 

Instant Cash Loan VS Credit Card
Instant Cash loan
Credit Card
Personal Loan
Personal loan Interest Rates
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