Gold Loan For Debt Consolidation

Debt consolidation is a very smart process to deal with the financial crunch. In this process, the borrower takes a loan to pay off multiple smaller debts. In this process, the borrower gets to clear the multiple credit card bills, monthly bills, and other debts. There is a big advantage of choosing debt consolidation methods to clear existing loans. If you were to pay separate loans, it would charge a lot as you will have to pay off the loans individually. But with this, you can consolidate all the loans under one umbrella. 

Why gold loans for debt consolidation -

There are many banks and NBFCs that offer loans to pay off the debt consolidation. Choosing gold loans as an option to pay off the existing loans is a smart option. Here you don't have to submit any money, property, or anything to avail it. All you need is a substantial amount of gold. Indian households usually do accumulate enough gold. Gold holds a lot of significance and is considered auspicious. All you need is to have the gold of quality ranging from 18 karat - 22 Karat or above and your KYC documents. Many banks like ICICI gold loan and NBFCs offer good loan amounts against the pledged gold according to their gold loan per gram scheme. 

Another very good thing is you don't need to sell off your gold to pay the loan amount. It will remain safe with the lending party till the tenure. Once, that is done you can repay the loan amount and get your gold back. The loan amount gets successfully processed within 1 hour. You can use this amount to pay off the consolidated debt. 

Thus, with gold loans, it becomes easier to get rid of those host of debts. Even the creditor's history doesn't matter to avail this loan in order to pay off your debts. Just submit the gold articles and you can easily get the loan amount to pay off the debts. 

Also read:-

Refinancing Gold Loans

CHECK YOUR ELIGIBILITY FOR A PERSONAL LOAN

Most banks and non-banking financial companies provide personal loans to those who need them to fulfill their urgent personal needs. Financial institutions provide a personal loan to help individuals and entities (salaried or non-salaried) financially. A personal loan is an unsecured type of loan. The individual or entity does not require to present security to the bank or non-banking financial company. In this scenario, the lender has some other factors on which they can base their decision on sanction the personal loan amount without hesitation. All of the banks and non-banking financial institutions have some prerequisites. They have set criteria to check the eligibility of an applicant. This makes it simple for both the lender and the applicant to understand if they can get a personal loan without wasting either of the individual’s time or efforts.

The eligibility criteria that can be easily complied with and some points that should be kept in mind are as follows:

• Most of the bank and non-banking financial companies have a minimum age limit for the applicants. For a personal loan, an individual must be a minimum of 21 years of age. The maximum age limit is 60 years. Anyone who is within that range can apply for a personal loan.

• The lender would want the applicant to have a stable source of income and a clean employment history. There is a minimum limit of income per month that a bank or non-banking financial companies demand. HDFC personal loan policy requires the applicants to have a minimum monthly income of Rs. 25,000. This figure can differ for banks and non-banking financial companies.  If the income of the applicant is below this bracket then a co-applicant can be involved.

• The credit score requirement is one of the most crucial points. The banks and non-banking financial companies are not very flaccid when it comes to the credit score of an individual. A credit score is a three-digit summarised version of the credit report. It reflects the creditworthiness of an individual. The range of the credit score is from 300-900. A higher credit score will play in the individual’s favor as it implies that the individual has not made any delays or defaults in the past and has always been prompt. An ideal credits score that the banks and non-banking financial companies would prefer is of 750 and above. 

HDFC personal loan policy’s eligibility criteria are just like that of any other financial institution and the details of the eligibility criteria are available online. You can easily access the information, apply for the loan at a personal loan interest rate starting from 10.75% per annum, and enjoy the maximum benefits of the HDFC personal loan.

If you are well versed with the criteria beforehand and in case any hindrance occurs, then you will be able to tackle the issue efficiently. By checking the eligibility criteria you will know if you are qualified for a personal loan or not. In case you do not satisfy the criteria then you can communicate with the bank or non-banking financial company to find out a way or you can look for other options available in the credit market.

Must Read-Relationship between personal loans and pandemic

Why are interest rates lower on gold loans?

Gold is a precious metal and the prices for gold are high in the market. But for those who are looking for taking a gold loan to meet their immediate financial needs, mainly caused by the COVID-19 pandemic, the rise in price means that they can mobilize a higher amount of money through gold loans interest rates are lower as compared to personal loans.

The biggest risk of lending the money is the non-payment of the funds. The lender will have to suffer the loss and this is why unsecured loans are generally provided at higher rates of interest. The lenders want it to be the second option. On the other hand, when gold is pledged as the collateral, there is no risk of suffering the loss. In case the borrower fails to pay back the loan, the lenders can sell the gold to recover the funds. Hence, the rates of interest are lower for gold loans.

With the decrease in the household income due to the loss of jobs and cut in salary due to the COVID-19 pandemic, more and more people are lining up to take gold loans against their gold ornaments. Personal loans or credit cards are very expensive and can put you under more stress, while gold loans are easily available and comparatively less expensive.

What is now making gold attractive is the rise in their prices, that is gold loans have turned cheaper, which also means that you can get a higher loan amount for your gold ornaments. According to the RBI, the LTV has increased from 75% to 85% of the pledged gold value, and also with the rise in the prices of gold, borrowers can now borrow more amount of gold loans against their already pledged gold ornaments.

It is easy to get a gold loan with less processing fees and also there is no need for any credit score or credit history. You can walk in with your gold jewelry and walk out with cash in your hand in less than an hour. Also, the process doesn’t require any extensive paperwork, unlike the process which is involved in getting personal loans. The higher the purity of your gold ornaments, the higher will be the rates of the gold loan per gram. ICICI Gold loans are one of the top gold loan schemes in the market. You can get a gold loan without any hassle with minimal documentation.

Also read this: Choose the right gold loan for you

Busting Famous Gold Loan Myths

The love for gold in Indian households is world-famous. Indians consider gold as auspicious. Gold is purchased at many festivals like Dhan teras, weddings, and even birthdays. This adulation for gold makes India one of the largest consumers of gold in the world. But, with the advent of gold loans in the market, you can use this gold to avail substantial gold amounts for meeting urgent financial requirements. 

Gold loan is a secured and profitable option for consumers possessing gold reserves. These loans are provided by the banks and Non-banking Financial Companies (NBFCs) for letting the consumers meet their immediate financial requirements. The loan amount is provided to the customers according to the gold loan per gram scheme. ICICI gold loan and many other banks levy charges and then give gold loan amounts against gold articles. But, the only hurdle in this process is the myths surrounding gold loans. The customer needs to understand the reality of these myths. 

Myths about gold loans

• Only jewelers offer gold loans - The biggest myth surrounding gold loans is that only jewelers offer it. Many banks and NBFCs offer gold loans against gold articles. It is always better to prefer banks and NBFCs for getting loans to prevent fraud. Bank provides you security and your belongings remain safe throughout the tenure. 

• Your gold gets exchanged - It is a common myth that your pledged gold might secretly get exchanged with fake ornaments or coins. But, actually, the banks and NBFCs keep your gold under high security in bank lockers. It will only be taken out when the loan tenure completes and is handed over to the consumer. 

• Gold loans come with high interest rates - A gold loan is a secured type of loan. This means that the Banks and NBFCs charge a very nominal gold loan interest rate which might range from 10.26% to 26%. Thus, availing of a gold loan is extremely feasible. 

• The gold loans can't be availed on old jewelry - It is a myth that you cannot get gold amounts against old and traditional jewelry. It doesn't matter whether the gold is old or new, the eligibility condition is to pledge gold which is 18 Karat or above. 

• Getting a gold loan is time-consuming - There is a myth that it takes a lot of time for the bank to process a gold loan. The truth is if you fulfill the eligibility criteria and have your KYC documents ready, the bank processes your loan in a maximum 1 hour. 

Also Read:- Gold Loan Over Others

PERSONAL LOAN FOR WORKING CAPITAL

Capital is the food and water of business. For a business to run smoothly, it is important to have a cushion to fall on in case of financial difficulties. Working capital is a type of capital required by the business for day-to-day essentials. It keeps the business up and running. Maintaining a certain level of working capital is required by the business to stay stable and firm. Personal loans are a feasible and approachable option for such individuals.

Unlike other forms of credit, a personal loan does not require collateral. It is given by the banks and NBFC (Non-banking Financial Companies) to financially support the individuals to meet their urgent personal needs. A personal loan is extended to both salaried employees as well as self-employed individuals and entities. Readily available funds of a personal loan can be utilized by the individuals as per their wish. The lender does not put constraints on the usage of funds and does not demand the purpose of the loan at the time of processing the personal loan application. The application for a personal loan asks for the basic details, and the documents have to be attached to this application. Lenders only need identity proof, residential proof, and income proof of an individual. Personal loans have comparatively lower costs. The Personal loan interest rates are very low along with a pliable repayment schedule.

With attractive personal loan interest of a minimum of 10.50% per annum, SBI personal loan policy can be easily accessed.  You can get the SBI personal loan policy without any troublesome procedure. The details of the personal loan policy are available on the official website of the bank.

Now the businessmen do not need to worry about going around all the time looking for financial assistance when they can have a personal loan even while sitting at home. All they need to do is fill out an application, attach the documents, and enjoy the facility of personal loans.

Also read:- 6 outrageous reasons you take a personal loan

Why your gold loan application Might be rejected?

Applying for a gold loan is simple and quick. All you are required to do is submit some documents and get them approved by your lender. However, this quick application procedure doesn’t guarantee your approval. You should ensure that all the details you have submitted are correct otherwise there may result in your gold loan application being rejected.

Here are three reasons why your gold loan application might get rejected:

1. One reason for the rejection of your loan might be due to the gold that you pledged was not of the required purity. It has to be a minimum of 18K purity to be offered as collateral. Therefore it is very necessary for you to check the purity of your gold ornaments before asking for a loan from the lender. Better quality gold can get you better rates of the gold loan per gram

2. Another important thing to do is check whether the details that you are submitting in the documents are correct or not. Documents such as your PAN card, driver’s license,  Adhaar card, and passport should not be fake. You must verify all the necessary details before submitting it to the lender otherwise it can lead to the rejection of your loan application.

3. You should be clear about all the terms and conditions that your lender has offered you before applying for the loan. If your loan got rejected then you must talk to your lender about this problem.

Given above are a few reasons that you must take care of if you want to get your gold loan proved at once without any difficulties. At last, you must read about all the conditions in which your banks can possess the loan and the conditions in which you can close your gold loan without any prepayment charges. Awareness is one the most important things while taking a lot otherwise it can create more problems for you instead of decreasing it.

There are many banks and NBFCs that offer gold loans. You can go for HDFC gold loans. They have decent gold loan interest rates schemes which are lower than other loans. And the process of disbursing is simple and swift.  

Must Read-A gold loan or a loan against gold

 

Tips to prevent your gold loan application rejection

Since gold loans are secured loans so your CIBIL score, credit history, income to debt ratio, and forms of credit check do not matter. But there are other reasons for which your application might get rejected so, if you want your application to be approved then there are some tips that you need to follow

• Unstable source of income- if you do not have a stable job or good income source then it might get your application rejected as the lender will not be willing to approve your loan with a possibility that you might not be able to pay it back.

• Too much credit- if you already have too many loans on your shoulder the banks might not approve another one adhering to the fact that you might not be able to pay it back.

• Mistakes in your application form- to avoid any technical issues or to prevent rejection you must keep your application form free of mistakes and typos.

• Valid Documents- Nothing really matters if you don’t have valid Id proof and address proof. A bank or a lender will not approve your loan without verifying them properly.

• Providing any wrong information- This is one of the most important steps. You should not provide any wrong or false information on purpose to your lender. It not only lowers your chance to get approved for the loan but also ruins your reputation for any future references.

• Poor quality gold- if the gold against which you want to take a loan is of poor quality or does not have a hallmark and is not up to the market standards then there are high chances of your application getting rejected.

To sum up, it can be said that although it is easy to get a gold loan application approved, there are certain things that you need to keep in mind and the most important of them is the authenticity of required documents and gold items. 

You can go for an ICICI gold loan as they provide one of the lowest gold loan interest rates. With proper documentation and quality of the gold, you can easily get the funds to support your urgent needs.

Also read this: Hidden charges in Gold Loans

NO GUARANTOR PERSONAL LOANS

Loans are accompanied by several requirements. Getting a loan wasn’t easy back then and it is not a light task even now. Applying for a loan, getting your documents verified, then the lender sanctions the amount and the final step is the disbursement of the loan amount. One can say that it is a protracted procedure with complicated prerequisites. A small mistake can devoid you of the benefits of the loan. This is why a lot of times people get a terrifying feeling way before getting a loan. Providing collateral to the lender and paying back the principal amount with high interest rates becomes a burden after a while. 

This is when a personal loan comes to your rescue. Personal loans are collateral-free loans. Granted to financially support individuals and entities to meet their personal needs, personal loans are easily accessible through various modes (online and offline). The personal loan interest rate charged by the banks and NBFCs (Non-Banking Financial Companies) is less when compared with other forms of loan. The repayment schedule can be modified as per your comfort. The principal amount and the personal loan interest are spread over the tenure of the personal loan in the form of Equated Monthly Installments (EMIs). There is no need for you to drown yourself in the paperwork and complicated documentation. 

Personal loan policy does not require you to present a guarantor, which is a must in most forms of loan. a guarantor is a second party who guarantees on behalf of you while you are getting a loan. The guarantor has to take responsibility in case you make default in the payments. Finding the right person as a guarantor is a difficult task. Taking up a guarantee is not something that a person would prefer to do causally. Nobody assumes this kind of responsibility that easily. This is not the case with personal loans as you are not required to have a guarantor while getting a personal loan.

HDFC personal loan policy provides you the facilities that suit you and regales your convenience with the utmost importance. As said before, personal loans are very straightforward. You can easily get this loan by filling out an application and providing complete and accurate documents to the banks or NBFCs (Non-Banking Financial Companies). Why wait for anyone to come up for your help when you can help yourself by availing a personal loan.

Must Read:- Personal loans: A foolproof guide

Reasons why gold loans are better than personal loans.

People nowadays looking for money, have plenty of options available with them but one has to be careful while choosing from one of those. Gold loans and personal loans, both have flexible terms and quick disbursal options. Both the loans can help an individual to get through the immediate liquidity crisis and also give competitive interest rates without a pinch on your pockets. Every coin has two sides, the same way both of these loans have their advantages and disadvantages and may prove to be a blessing or financial burden on an individual. The reason one has to be careful while opting for which way to go. But one of them has to be safer than the other, so let us talk about both.

GOLD LOANS:-

It is a secured loan type where you pledge your gold as collateral with the lending institutions (banks/NBFCs). It is considered a good option for short-term money requirements. Following are the key features of a gold loan:-

• Higher loan amount:- Many

• banks or lending institutions provide a personal loan of a maximum of Rs. 40 lacs, whereas the loan amount for gold loans can go up to 5 crores depending on the lending institutions and the amount of gold you pledge as collateral (loan amount is 75-80% of the gold you have pledged).

• No credit score required:- While opting for a gold loan, you need not worry about the CIBIL or credit score with the bank, as banks do not consider the credit history.

• Low rate of interest:- Gold loans Interest rates are generally low as compared to personal loans as the bank has your gold as security. Thus it results in a small hole in your pocket while repaying the loan when compared to a personal loan.

• Repayment flexibility:- gold loan is the only loan type that gives you freedom of choice in tenure and repayment options. The most common repayment options are:- 

1. Regular EMI options

2. Overdraft

3. Bullet repayment

PERSONAL LOANS:-

Personal loans are an unsecured loan type that is ideal for fulfilling urgent and unplanned big expenses. It is opted to fulfill the short-term financial crisis. It also has some key features which may attract you to go for this loan type like:-

• No collateral required

• Quick payment of money

• Minimum paperwork

• Can serve different purposes i.e. not bound to spend money in a restricted field.

Even after so many advantages, a personal loan can prove to be a burden on your pocket. Since it does not require any collateral or security so the Personal loan interest rates are very high, usually ranging from 10-18%. Lending institutions generally lend an amount up to Rs 40 lacs. Whereas when spoken about the gold loan they can provide you a loan amount of Rs 5 crores. A personal loan requires you to have a good CIBIL or credit score with the bank but in the Gold loan, it does not require you to have a credit score as you pledge your gold with the bank as security. A personal loan can take up to 2-7 days for disbursal of cash whereas in gold loan it is as quick as 30 minutes or a maximum a day. Both the loans have just two things in common that is - minimum paperwork and short-term loans.

Must read:- 

Mistakes you should not make while getting a Gold Loan

 

CREDIT PROFILE ESSENTIALS TO CONSIDER BEFORE APPLYING OR A PERSONAL LOAN

A bank or NBFC (Non-Banking Financial Companies) assesses their risk which they will have to consider if they grant the personal loan. A personal loan is an unsecured form of a loan. The risk for the lender is high while granting a personal loan. The banks and NBFC (Non-Banking Financial Companies) consider the credit profile very thoroughly. 

Many personal loan applications are rejected due to a lack of good credit history.  Credit Information Bureau India Limited, popularly known a CIBIL, prepares this report that confirms the creditworthiness of an individual. A credit report is attached to the loan application while applying for a personal loan. 

This credit report includes the credit history of an individual. The credits that were taken before, repayment pattern, and amount due outstanding, these things form an integral part of the credit report. The lenders will specifically check for any delays or defaults made by the individual in the past.

 The credit report has a three-digit summarized number known as the CIBIL/credit score. The range of the credit score is from 300 to 900. Every delay or default you make will be immediately reflected in this score. Ideally, the score that is required by the banks and NBFC  (Non-Banking Financial Companies) is 750 and above. With a low credit score, a personal loan can be availed only at a high personal loan interest rate. Your credit report plays a huge role in convincing the bank or NBFC (Non-Banking Financial Companies)  to provide you with a personal loan. 

You can get SBI personal loan policy with a minimum credit score of 650 and still enjoy the benefits of the low personal loan interest rate.

Having a good credit history and a credit score above 750 is not the end of the story. It is important on your path to maintain this score in the future as well. Any delays or defaults may deteriorate the score you have now.

Must Read-Let's get you acquainted with extra charges in personal loans

IS PERSONAL LOAN AVAILABLE FOR NON-SALARIED INDIVIDUALS?

A personal loan can be availed by everyone and for everything. Whether you are a salaried employee or a self-employed individual, a personal loan is there to help you out on your good as well as bad days. For a salaried employee, it becomes easy to get a personal loan because these individuals have a fixed and stable source of income. For a self-employed or a non-salaried individual, it is slightly complicated to get a personal loan but not impossible.

A self-employed individual can use the funds from a personal loan for personal as well as business-related purposes. A personal loan can be taken at a minimal personal loan interest rate to meet the working capital requirements of the individual’s business.

Handling business and running to banks or NBFC (Non-Banking Financial Companies) whenever you are in need of funds is not an easy task, but with a personal loan, the application process is so simple and swift that there is no need to rush to the lender every second day. The individual does not need to maintain stacks of documents and get buried in paperwork. A personal loan is now available online, as well. HDFC personal loan policy can be applied for through the official website of HDFC bank. A businessman can get HDFC personal loan policy at a personal loan interest rate starting from 10.75% per annum and at just one click.

 An online application is required to be filled out by the applicant and basic documents like identity proof, income proof, credit report, and residential proof have to be attached with the application the offline and online procedure is more or less the same. The only difference is that in the online process you are not required to visit a bank or NBFC (Non-Banking Financial Companies). The personal loan is disbursed within 3 to 5 days. 

The eligibility criteria for a self-employed individual who wants a personal loan are that the individual must be of minimum 21 years of age and the business be up and running for the past two years (at least). The minimum limit of income required for availing of a personal loan varies depending on the personal loan amount required by the self-employed individual.

Banks and NBFC (Non-Banking Financial Companies) do not devoid non-salaried or self-employed individuals from getting the benefits of a personal loan. If you are a non-salaried individual and need funds on an urgent basis, then all you need to do is contact your bank, get the details and apply for a personal loan.

Also read this: 3 competitive edge of personal loan

How To Apply For A Gold Loan Online

Gold prices have always been skyrocketing, but now people have decided to use these soaring prices to their advantage. Gold loans prevent people from getting rid of that squeezed household income and medical or financial emergencies. People are now looking for an economical and profitable way to get credit. Gold loans are in turn the best way to get credit against the physical gold.

Different types of loans come up with different charges, these charges differ according to the policies levied by different banks and NBFCs (Non-Banking Financial Companies). So, getting a loan could be easy but the costs attached to it might not always be under the financial capacity of a person. That is when an economical and easy to get a loan is required. That is when gold loans act as the saving grace.

Gold loans are extremely convenient to apply for. You can now apply for a gold loan comfortably by sitting at your home. Yes, you can avail of the loan easily while relaxing at your home. 

Steps to apply for a gold loan online -

Step 1: Visit the desired bank or NBFCs website. For instance, if you are thinking of applying for an HDFC gold loan. Then visit the HDFC bank official website. 

Step 2: Go to the loans tab and click on gold loan. You will be asked to mention your name, city where you are currently residing, date of birth, mobile number, amount you want to borrow, tenure, etc. view offers. 

Step 3: Verify the mobile number and then view the offers. 

Once all the details are filled in, the bank's representative will contact you to process the gold loan. 

Must Read:- Applying for HDFC gold loan policy online

How gold loans can save you from a financial crisis

Gold has been one of the oldest modes of wealth exchange. It is one of those things, that have always been valuable and provide easy liquidity. Also, the lenders are more inclined towards providing secured loans. The charges and interest rates on unsecured loans are kept higher because it needs to be taken as a second option and not the first choice. This is because, in the case of an unsecured loan, the lender has to bear the risk of loss if the borrower denies reimbursing the funds due to financial crisis, or lack of intentions. 

Gold loan's interest rates are much lower as compared to unsecured loans. And the lending institutions provide decent rates of gold loans per gram due to the low risks of lending money. Also, the processing of gold loans is also pretty easy and quick and the borrower can receive the funds within an hour. And in case of a financial crisis, people need funds immediately. Going for an unsecured loan isn’t a good option in case of a financial emergency. It generally involves a lot of checking and verifications which can take a lot of time. The borrower has to make several visits to the bank and provide numerous documents for verification. People with lower CIBIL scores can also get their loan applications rejected.  

Creditworthiness plays an important role in getting an unsecured loan sanctioned. However, Gold loans provide a better option of getting the loans. CIBIL scores and other credits do not have any impact on the gold loan applications. Since the bank or NBFC already has the gold against which the loan is given, thus, in case the borrower is a defaulter, the lenders can always auction the gold to get their repayment.  

The increase in the rates of gold has made the borrowers eligible for higher amounts of loans. Gold loans are one of the modes of money lending that have been practicing for centuries. All across the world, people have used gold to borrow money in case of financial emergencies. Thus, the security and trust that gold offers to the lenders are second to none.

In the modern age, there are many lenders in the market who provide gold loans. Therefore, you should always compare the ROIs and other charges involved in getting the loan finalized.

ICICI gold loans come with one of the lowest interest rates and it is pretty easy to avail them. All you need is KYC documents and gold that you can pledge to the bank.

Must read:- DIFFERENT METHODS TO REPAY GOLD LOAN

Who is eligible to apply for a gold loan?

• The cash crunch is all things certain at any given point in life. Unsuccessful business outcomes, month-end blues to medical emergencies you don't know when there might be an immediate need of a substantial amount of money. Most people are now looking for loans to manage the temporary cash crisis. Comparatively low-interest rates, easy application, and faster sanction of gold loans make it a better alternative than personal loans. 

• Many banks have recently updated their bank schemes and money lending policy. Mostly the banks/lender offer 75% of the gold's value after checking the weight and purity of gold. The banks and NBFCs lend the loan amount according to their Gold loan interest rates and gold loan per gram policy. For instance, ICICI gold loan policy provides Rs.2,914 to Rs.3,562 depending on the purity of gold under their gold loan per gram scheme. 

• The borrower should be well versed with the policies and rules regulations of the lending organization. But, it is equally important to know the eligibility criteria for availing gold loan. 

• In order to apply for a gold loan, 

• You should be an Indian citizen of above 18 years, you can apply for a gold loan. 

• Have a steady source of income, to repay the loan. Some banks might not ask for the income certificate. 

• Should necessarily have the KYC documents ready. 

• You should have valid ID proof, address proof along with 3 latest Passport size color photos as the basic gold loan documentation. 

• Should have a substantial amount of gold articles to be submitted as security in order to avail the loan. 

•  On the fulfillment of these basic eligibility criteria, the consumer can either apply for the gold loan online or visit the bank/NBFC to avail of the loan amount against the gold articles submitted to the bank. The bank sanctions the loan amount and it gets processed in less than 45 minutes. Thus, a gold loan is relatively economic and easier to apply for. 

Must Read-Maximum amount and tenure of a gold loan

PERSONAL LOANS VERSUS CREDIT CARDS

When we are standing face to face with financial difficulty at that time all we can think of is running away from that place as fast as we can. We look for all the possible and feasible options. In such time we are so occupied with problems that we need a quick way out of it. The options that we generally come up with are personal loans and credit cards. Most of us are inclined more towards credit cards thinking that it is an easy way out without even giving it a second thought. A lot of us go for a personal loan as well but again we do not think it through. It is well said that we should not take any major decisions while dealing with a crisis in life.  

Personal loans are collateral-free loans given by banks and NBFC (Non-Banking Financial Companies) to support you financially and help you meet your personal needs. Personal loans have a straightforward application process. The documents required are basic identity proof, income proof, and residential proof. The maximum personal loan amount you can get is fifty lacs. The repayment schedule is finalized based on your capacity. The personal loan interest rates are comparatively lower than the credit card interest rates. 

You can easily get an HDFC personal loan policy at a personal loan interest rate starting from 10.75% per annum and with flexible terms and conditions.

Whereas, a credit card is just like your normal ATM/debit card. The only difference here is that a credit card allows you to expend money even when you do not have any balance in your bank account. A financial institution issues a credit card based on the credit score and allows a pre-approved limit up to which you can borrow money. The maximum limit for a credit card is just five lacs (which may differ from banks and non-banking financial companies). The repayment structure of credit cards is rigid. The interest rate levied by institutions on a credit card transaction is exorbitant. In exchange for immediate funds, the institutions charge a lot from you.

HDFC bank provides a credit card facility with an interest rate of 41.88% per annum.

For a credit card, you just have to go through the paperwork once and you can enjoy the readily available funds at any point in time. With a personal loan, paperwork has to be done every time you want a loan but the cost of getting a personal loan is very less as compared to the cost of credit cards.

Readily available funds or saving in terms of cost, it depends on your preference and needs. If you want hassle-free funds at a low cost it is advisable to go for a personal loan

Also read this: The Ultimate Guide To Online Personal Loans