How a personal loan on credit card is different from an unsecured loan

Unexpected emergencies and expenses can come across anyone’s path without any warnings. Thus, one must always be prepared to tackle them wisely. The best way to be prepared is by saving funds and creating a pool of financial resources. However, the increasing costs of living don’t allow many people to do so. Thus, at such times, a credit card is of extreme importance; as it provides us with financial assistance. However, did you know that you can apply for a personal loan on credit card? If you didn’t, then today in this article, we will be discussing that and the benefits associated with it. What is a personal loan on your credit card? Firstly, let us understand as to what a personal loan is- it is an unsecured amount of capital, given out by the financial institutions for us to tackle unexpected financial exigencies. A personal loan is unsecured; meaning, you don’t have to provide any sort of collateral to make use of the capital amount. Further, you can make use of the loan amount to relieve any of your financial exigencies; such as- take care of wedding expenses, consolidate your existing debt, etc. Now, a personal loan on credit card is quite similar to a normal unsecured loan; however, quite different at the same time. Now, let us understand the major differences between a personal on your credit card and an unsecured loan: • Process: The biggest hassle that we face when applying for a personal loan through any financial institutions are the eligibility criteria that come along with it. These eligibility criteria are set by the banks and NBFCs (non-banking financial companies) to ensure that you will be able to repay the loan amount in time. The eligibility criteria set by the financial institutions vary from one lender to another; however, a few basic ones focus on your income source, job stability, employer’s reputation in the market, etc. Further, you need to submit all of these documents to the lender for the further personal loan process. However, that is not the case with the personal loan on your credit card- this loan is basically pre-approved and thus, you need not have to submit any sort of documents. •Disbursal: When applying for a personal loan, many people are already in need of urgent cash; thus, they look for sources that will grant them with quick loan disbursal. Thus, a personal loan on a credit card is the perfect source for that- it grants people with early access to cash; as the loan amount is pre-approved. Thus, the personal loan process is not only quick but also hassle-free. •Loan amount: The major difference between a normal unsecured loan and a personal loan on a credit card is the loan amount sanctioned by the financial institutions. The reason being, at times, the personal loan amount given out on your credit card is lower as compared to a normal unsecured loan. However, this will depend upon your credit card limit and credit score.

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Comment by AlexLee on October 2, 2019 at 11:18pm

I had a credit card and I closed it very quickly. I've never liked using credit cards because it's a vicious circle of debt. It's much better to borrow cash. Learn right now how to apply sss id application and it will be useful to you in the future.

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