In today’s fast-paced financial world, getting access to credit is quicker than ever. Two of the most popular and convenient options are loan apps and credit card loans. Both options allow you to borrow funds without needing to visit a bank. However, when it comes to choosing between the two, many people are unsure which one best fits their needs.
If you’re caught in the same dilemma, this guide will help you make an informed decision. Let’s understand both options, their advantages, and how to choose the right one for your financial needs.
What Is a Loan App?
A loan application is a digital lending platform that allows users to apply for an instant loan online. NBFCs or banks typically offer these apps and are accessible through smartphones. The best loan platforms provide fast approvals, flexible repayment options, and minimal paperwork.
Many loan applications cater to diverse borrower profiles, including salaried individuals, self-employed professionals, and those with limited credit history. The best loan app will often offer features like:
- High-value instant credit amounts
- Quick disbursal (sometimes within minutes)
- No collateral
- Transparent charges and low processing fees
What Is a Credit Card Loan?
A credit card loan is a pre-approved amount provided on the basis of users’ card limit. Banks and financial institutions offer this as an add-on facility to cardholders, which is different from regular credit card purchases. It is generally a loan which you can repay in EMIs.
These loans are typically offered without additional documentation and are disbursed quickly to your account or card. However, they are only available if you already have a credit card and your issuer considers you eligible.
Loan App vs Credit Card Loan: Key Differences
Let’s compare the two across some key factors:
1. Eligibility & Accessibility
Loan Application: Anyone can download the app and apply for an instant loan, even without a credit card or existing bank relationship.
Credit Card Loan: This loan facility is available only to existing credit card holders with a good repayment history.
2. Loan Amount & Flexibility
Loan Application: Depending on your profile, you can get amounts ranging from a few thousand to several lakhs.
Credit Card Loan: Your credit limit usually determines your maximum loan amount.
3. Approval Speed
Loan Application: The best loan apps offer approval in minutes, and some disburse funds within hours.
Credit Card Loan: Since it’s pre-approved, the amount is available quickly, often on the same day.
4. Documentation
Loan Application: Minimal documentation needed, especially with digital KYC features.
Credit Card Loan: No additional paperwork if your credit card provider already holds your KYC details.
5. Repayment Terms
Loan Application: Provides flexible repayment plans, with EMIs spanning from 3 to 60 months.
Credit Card Loan: Usually restricted to 6 to 24 months, featuring fixed EMI schedules.
When Should You Choose a Loan App?
Opt for a loan app if:
- Your credit limit is less than, or you don’t have a credit card.
- You want to compare offers and choose the best loan platform based on interest rates and flexibility.
- You’re looking for instant credit for medical emergencies, wedding expenses, travel, or debt consolidation.
When Should You Choose a Credit Card Loan?
Choose a credit card loan if:
- You need a small amount quickly and already have a card with a good limit.
- You want to convert your remaining balance into Equated Monthly Instalments (EMIs).
- You want a short-term loan without new documentation.
Final Thoughts
Both loan apps and credit card loans serve the same basic purpose, providing fast and accessible credit. However, loan platforms offer broader accessibility, higher flexibility, and a range of features that often make them more attractive, especially for first-time borrowers or those with limited credit card limits.
If you’re looking for instant credit with an easy application process, minimal paperwork, and faster disbursement, using a top loan app like the one offered by Bajaj Finserv could be the right choice. Bajaj Finserv offers high-value personal loans through its app, featuring instant approvals, minimal documentation, and zero hidden charges, making it a dependable option when you need funds quickly.
