Unexpected financial emergencies could arise in financial deficits at any time, which we could deal with with the aid of a suitable credit option that enables the prompt flow of necessary funds. A personal loan is likely the first alternative that comes to mind in these circumstances because it is among the simplest and most widely used loan options for taking care of urgent financial responsibilities in addition to being a helpful tool like the HDFC Personal loan EMI calculator.

Owners of credit cards, on the other hand, have a second credit option at their disposal in the form of a loan against credit card. They may decide to use this option because it has features that are almost identical to those of personal loans, with the exception of interest rates that are higher than HDFC Personal Loan Interest rates.

To help you decide between the two loan options, the following comparison of each is provided:

Loan qualifying requirements

The lender takes into account the borrower’s credit rating, monthly income, employment history, and employer profile before approving a personal loan. In contrast, a specific group of cardholders receives pre-approved loans backed by credit cards from card issuers, who primarily base this decision on the type of card, the cardholders’ spending habits, and their payment history. 

When applying for a loan backed by a credit card, borrowers must already be familiar with the credit card provider; however, this criterion is not present when applying for a personal loan. But remember to utilise the HDFC Personal loan EMI calculator to determine your ability to pay your EMIs before deciding to take out a personal loan.

Current loan interest rate 

Usually, the lender and the borrower’s credit history determine HDFC Personal Loan Interest rates. Credit card loans normally have interest rates that are 1% higher than personal loans. Because of their lower interest rates, personal loans are recommended if you can wait at least 2-3 days or longer for the loan disbursement. Compared to credit card loans, interest rates.

Processing timeframes and additional costs

One of the shortest processing timeframes is for credit card loans, with payouts typically occurring just hours after the loan application is received. For qualified credit card holders who already have credit cards in their possession, loans secured by credit cards are pre-approved, avoiding the need for physical verification. Additionally, some card issuers claim that these loans are disbursed instantly and without delay. A credit card holder can apply for a loan online using internet banking or by calling customer care if they meet the prerequisites. Processing costs for credit card loans could be in the region of 1.5% to 2.5% of the total loan amount.

In order for a borrower’s personal loan application to be finished and accepted, supporting evidence such as pay stubs, tax return forms, and KYC documents must be submitted. Due to the lengthy document verification process, personal loans are frequently disbursed 2–7 days after the loan application has been submitted. Lenders frequently reduce processing fees during the holiday season or as a special offer for a limited time in order to increase demand. Processing costs could be between 1% and 3% of the loan amount.

The loan’s amount

A credit card can be used as collateral for loans up to the card issuer’s predetermined lending limit. The cardholder’s credit limit is momentarily reduced by the sanctioned loan amount, which can limit how much they can spend. However, as long as the borrower keeps paying the loan EMIs, the credit limit will eventually become usable. Credit card loans are currently offered by many credit card providers, occasionally even in excess of the credit limit allowed on the card in question. 

Despite the fact that the normal range for personal loans is between Rs 50,000 and Rs 20 lakh, some lenders assert they may grant loans up to Rs 40 lakh. Keep in mind that the major drivers of the sanctioned loan amount in the event of a personal loan would be the loan length chosen and the borrower’s ability to repay the loan as estimated by the HDFC Personal loan EMI calculator.

Duration of the loan

Most lenders offer personal loans with maturities of one to five years, however some even offer durations as long as six or seven years. Contrarily, credit card loans sometimes have repayment periods of between six months and five years. 


Now comes to the question of what to do? After assessing your personal loan possibilities and credit card loan, pick one of these two. Credit card loans with lower interest rates are preferred to personal loans with higher HDFC Personal Loan Interest rates for borrowers who aim to finish their repayment schedule within a year. A shorter loan period will save the borrower money overall on interest costs, but it will also result in a higher EMI, which you can check using the HDFC Personal loan EMI calculator. Be careful while deciding on the loan term to avoid forgoing payments towards crucial financial objectives by selecting a shorter duration.

payments for upfront fees

Depending on the lender’s policies, prepayment penalties for personal loans could occasionally approach 5%. In order to avoid penalizing borrowers for making early payments, banks, particularly those in the public sector, commonly issue personal loans with variable interest rates rather than fixed ones. It is crucial to keep in mind that banks cannot penalise customers who prepay retail loans with variable interest rates in accordance with RBI regulations.

Another loan to not forget while comparing these two, is gold loan. It’s crucial to keep in mind that gold loans frequently outperform the great majority of other loan options because of all the benefits they offer. Because loans against gold are secured by the gold that the borrower owns, lenders normally do not use the applicant’s credit score when deciding whether or not to approve the loan. Therefore, those with poor or no credit should give gold loans some serious thought. However, candidates for salary may be qualified for personal loans or other loans with lower interest rates and longer repayment terms if they work for reputable organisations and have a strong credit history.