Financial crunches can hit you anytime. Different people may have different preferences to deal with such situations. One may wonder which could be the best option to tackle unforeseen events or urgencies. Usually people may opt for a Personal Loan to cover their immediate expenses or use the funds available on their Credit Card. Both these methods may seem similar as they offer you an advance which you can repay later but there are some fundamental differences in the nature of their repayment, usage, interest rates etc. Let’s look at both these products independently first.

What is a Personal Loan?

Personal Loan is an advance offered as a lump sum without pledging any collateral from the borrower. Interest is charged on the amount borrowed and the it is expected to be repaid within a defined time period. Usually, there are no restrictions on the end use of the amount borrowed through a Personal Loan. Hence, you can use it for a wide range of purposes – Education, Travel, Weddings, Medical Expense, Renovation etc. You may need a good credit score (generally 750 & above) in order to avail a Personal Loan. There are multiple instant Personal Loan apps available online that can help you get quick financial assistance. They are Early Salary, Bajaj Personal Loan, Tata Capital, Kissht etc. Each platform can have its own set of criteria which you may have to fulfil in order to be deemed as eligible for availing an instant Personal Loan online.

What is a Credit Card?

The history of Credit Cards can be traced back to the 1920’s in the United States where they were first used. Since then, this instrument has gained popularity rapidly among the masses. A Credit Card is an instrument which allows its owner to pay for goods or services in advance; up to a certain limit and then repay it with interest later. Generally, it possesses the attribute of Revolving Credit; wherein the Credit Limit is revised upon complete repayment of past debts.  Here, there is no fixed time frame to pay back the amount used through the Credit Card. The more time any card holder takes to repay, the more interest he is charged. There are numerous options where you can apply for a credit card online. RBL MyCard, Bajaj Finserv, Cred are some of the popular Credit Card apps or you can also apply on any Bank application.

So, what is better?

This question is better answered only if you are aware of your spending and repayment habits. Although, here’s a quick comparison to help you choose better –

Personal Loan	Credit Card
Amount once borrowed cannot be revised	Credit limit can be revised after successful repayment
Lower interest rates	Slightly higher rates than Personal Loan
Fixed time period for repayment	Higher interest rates & penalties if repayment is delayed
No collateral needed	There are Secured Credit Cards which need a cash deposit as a security.
CIBIL score needs to be strong	CIBIL score needs to be strong
Offered as a Lump sum	Credit limit may not be increased in case of bad CIBIL
No restriction on end use	No restriction on end use

How to build a strong CIBIL?

There are different ways in which you can build a good CIBIL score for yourself. The first thing you might need to know about a good CIBIL is that you cannot possibly have it in a single day. You need to be consistently regular with your finances for at least over a period of one year. Here’s what you can do for a good CIBIL –

• File your Income Tax return regularly.
• Pay EMIs on time without fail.
• Avail a Card Credit& use it often.
• Go for a secured Credit Card if you have no credit history.
• Choose longer tenure while availing loans.
• Analyse your Credit Report and try to improvise.
• Try and maintain disciplined financial behaviour

You can choose either of the two; Credit Card or Personal Loan, but the goal is to opt for the one which can be in line with your repayment capacity & habits. If you can stick to time frame & are certain about your capacity to repay, you can make a well-informed decision. Go for a Personal Loan if you are looking for a lump sum amount & lower interest rate.  Or else, choose a Credit Card but make sure you repay the debt consistently. related to More info to visit : dailyarticlesnews