Personal Loan Vs Credit Card Loan

What Is Personal Loan?

A personal loan refers to a type of unsecured loan taken from bank or NBFC to fulfill personal financial needs. One does not have to give any collateral to get this loan. Banks and NBFCs offer this loan based on the borrower’s credit score, current loan obligations, capacity to pay off the loan and other eligibility criteria. This is a multipurpose loan which one can use for any personal reason.

What Is Credit Card Loan?

A credit card loan is given by the bank against the credit card one is in hold of. In this type of loan, the amount on your credit card which is not utilized is given as loan to the borrower. This loan is approved very quickly and easy to pay off. Banks give the credit card loan based on the credit card history of the borrower.

Category Credit Card Loan Personal Loan
Documents Required This type of loan does not need any documentation as bank already has all the required details of the borrower from the credit card application and billings. But a credit card is basic necessity. This type of loan requires all the KYC documents along with credit score report and other loan details on paper, if any.
Tenure The credit card loan is given for shorter tenure, which is not more than 24 months*. A personal loan is given for a longer tenure compared to credit card loan. The tenure here ranges from 5 to 7 years as per the borrower’s needs and amount approved.
Loan Amount Approved The loan amount approved in credit card loan is very small. The amount depends on which type of credit card the borrower has. In personal loan, maximum amount approved is Rs. 15,00,000 to Rs. 20,00,00 totally based on borrower’s profile.
Interest Rate Banks offer interest rate from 12% to 20% in credit card loan. Banks and NBFCs offer interest rates from 11.29% to 35% in personal loans.
Account Requirement One has to have a credit card and a credit card account with a bank to get a credit card loan. Even if you don’t have a bank account with certain bank, bank still approves your loan.
Processing Fee Banks charges lowest processing fee for credit card loan approval. Banks and NBFCs charge nearly 1.50% to 2% of loan amount + tax as processing fee for loan approval.


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