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Everyone requires financial help at some point in their life. There are a lot of reasons why most people opt for a loan. Whether it be for your travel expenses, payment of bills or getting a new home. And there are a lot of loan options available for all kinds of financial requirements. Sometimes borrowing money for your personal needs is the best option, and it may even make the most financial sense. That’s when you’ll have to decide between a line of credit vs. personal loan options. To make the correct choice you first need to get a clear understanding of both the options and which one will be better for you.
Personal Loans vs Line of Credit
Loan Amount
When you apply for a personal loan, you will receive the complete loan amount you applied for in your bank account. The loan amount remains with you whether utilized or not.
Whereas, in line of credit, you have a limit of borrowing money. The loan limit is decided by banks based on your credit-worthiness. The interest rate will be charged only on the funds you will use.
Interest Rates
The difference between a personal loan and a personal line of credit lies in the interest rate and its type. The interest rate on this loan is fixed and generally low. The interest rate on a line of credit is flexible depending on the prevalent rate of a loan.
Repayment Period
The repayment period for personal loans is fixed, which is generally 1-5 years. Whereas, for the line of credit, the repayment period is flexible, as it will depend on the credits and the financial institutional policies.
Secured or Unsecured Type
The line of credit can be both secured and unsecured. For the secured Line of credit, there is a low-interest rate because you have to put up collateral to get the credits. For an unsecured LOC, you are not required to provide any collateral.
Personal loans are unsecured loans, where you can get the funds without pledging any of your valuable assets as security for the loan.
When to Opt for a Personal Line Of Credit?
A line of credit from a bank or credit union is often used by workers who have a varied income, such as a salesperson who works on commission, or an independent contractor. A line of credit can also be a smart borrowing option when the total amount you will need is unknown, or when your costs will be ongoing. In such cases, where the pay can vary so much every month, there is a constant requirement of money. A line of credit offers funds to bridge any gaps in income that are available when required. The rate of interest will only be charged on the amount that is used.
When to Opt for a Personal Loan?
For one-time transactions, a personal loan can offer a better deal than a line of credit, along with a clearer repayment plan. To apply for this loan, you must know exactly how much money is required before applying for a loan. This way you can borrow enough money to cover your financial requirements, the loan funds are often used to cover expenses such as car repairs or emergency costs. Another common use of this loan is to consolidate or refinance other debts, such as higher-interest credit card debt. You can take the help of a personal loan EMI calculator to get an estimate of the loan amount that is to be repaid every month.
How to Apply for Line of Credit?
The following are the steps to apply for Line of Credit (LOC)
Step 1: Fill the application for a line of credit in your bank
Step 2: The lender receives your application and sets your credit limit based on your credit history.
Step 3: Once it is set, you can withdraw a loan amount up to the specific loan limit. You can use the funds, return, and withdraw again if required.
How to Apply for a Personal Loan?
Follow the below-mentioned steps to apply for the loan.
Step 1: Fill in your personal, financial, and employment details
Step 2: Choose the loan amount you require and tenure
Step 3: Submit your proof of identity, address proof and a bank account statement of the last 3 months.
Step 4: Once the application is approved, the loan amount will be disbursed in your account within 24 hours.
There are several personal loan apps available today. One such app is the Finserv MARKETS app. You can also apply for a loan through the Finserv MARKETS website. The online application process for Bajaj Finserv Personal Loan is quite convenient. At Finserv MARKETS the loan application process requires minimal documentation which makes it an ideal choice for getting a loan at attractive interest rates. You can avail flexible repayment tenure of up to 12 to 60 months on loans.
The online loan application can be approved under just 3 minutes and the loan amount will be credited to your bank account in no time. You also get complete access to a loan EMI calculator where you can easily calculate your monthly instalments, even before you apply for a loan. Get an instant loan today and enjoy all the benefits it has to offer.
“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”
