Personal Loan or Credit Card

Deciding between a personal loan and a credit card is difficult for most users. Let us compare both options to see which is better.

What is Better, a Personal Loan or a Credit Card? 

Before deciding on a personal loan or a credit card, you should review various aspects of each product, compare them, and decide which is best for you.

Difference Between a Personal Loan and a Credit


Personal Loan

A personal loan is provided by lending institutions to loan applicants looking to borrow funds in lumpsum and upfront. It is a fixed amount that has to be repaid along with interest charges in a specified period called tenure. Personal loans are repaid to the lending institution in convenient monthly payments called EMIs.

Characteristics of a Personal Loan

• The repayment of the loan is done through monthly installments called EMIs. Borrowers looking for longer repayment tenure are advised to opt for a personal loan

• The personal loan EMI calculator available on the website of the lending institutions like Fullerton India facilitates the calculation of the interest and tenure. 

• Total amount borrowed by the customer is the basis of calculating loan interest

• Loans may have longer terms, up to 60 months

• Personal loans are multi-purpose loans that can be used to fund marriage expenses, education,  travel, medical, debt consolidation, or any other urgent requirements

Credit card 

In case of a credit card, the lender grants an amount of money in parts or whole. This type of financing is usually recommended for paying off short term debts. The borrowed amount in case of a credit card is usually dependent on the funds spent on the card, and the balance left at the end of a monthly billing cycle. 

Characteristics of a Credit card

• The rate of interest for loans against credit cards is much higher than that of personal loans. 

• Some lenders levy charges on the unused balance. They also come with annual fees, over-the-limit and late fees

  • In case you need hard cash, you will attract interests from Day 1.
  • You will only get a time period of 45-60 days to pay off your debts

 Why Personal Loans Works Better?

  • The credit card is usually used when one does not have cash and there is an urgent expense in the short term. Credit cards are usually recommended for low-ticket purchases.  You may use a credit card to cover unforeseen expenses that can be paid quickly.  
  • Personal loans’ eligibility criteria with lending institutions like Fullerton India are less stringent as compared to credit cards. Loans are ideal for situations wherein you need quick funding in lumpsum or need emergency cash at lower interest rates. In case all documentation is in place and verified, you will be approved a loan amount quickly and the money will be disbursed into your account shortly after.

How to apply for a Personal Loan?

You have to provide the necessary documents to the lending institution for processing of quick personal loans. The following documents are required for personal loans (for salaried):

  • PAN Card
  • Identity Proof like Aadhaar card, Driving License, Passport, Voter ID, etc.  
  • Signature proof (Passport, Pan card, etc) Address proof like Passport copy, Aadhaar Card, driving license, etc.Income proof – salary slips for the last six months, ITR or form 16
  • Bank statements of the past 6 months

The following documents are required for personal loans (for salaried):

  • Balance sheet and P&L account, income computation for the last 2 years
  • ITR of the last 2 years
  • Business proofs such as (License, registration certificate, GST number)
  • IT assessment OR Clearance Certificate 

After your documents are verified, the loan will be transferred to your account subject to you meeting the eligibility criteria of the lending institution. 

Conclusion: Applying for quick personal loans is simple and fast. If you want a personal loan, contact the lender of your choice and apply today.

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