Instant Loan Vs Credit Card Vs Personal Loan: Key Differences Explained

Confused about which one to choose among instant loan vs credit card vs personal loan? Explore the differences and decide which one to choose for your needs.

When it comes to accessing quick funds, choosing the right option can be tricky. Whether you are faced with an urgent expense or planning for a major purchase, the decision between instant loan vs credit card vs personal loan can make all the difference.

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Each option comes with its own set of benefits and limitations, so it is essential to understand which one fits your needs best.

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Let us go through this blog to understand the differences among them and help you make an informed choice.

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What Are the Features of Instant Loan?

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Here are some notable features of instant loans:

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Instant loans are based on your risk profile and income, so pre-approved limits let you apply without concerns about your credit score affecting the process.
These loans are designed for shorter repayment periods.
Instant cash loans do not require any security, and there are no restrictions on how you use the borrowed funds.
Lenders charge higher interest rates due to the short-term and quick approval process, which increases default risks.
Missing payments on instant loans can quickly harm your credit score.

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What Are the Features of Credit Cards?

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Here are some key features of a credit card you should know:

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A credit card is issued with a bank-approved credit limit, determining how much the cardholder can spend using it.
The borrowed amount must be repaid to the bank by the due date, usually 30 days after making a purchase.
Each credit card comes with a grace period, which is the timeframe within which the borrowed amount must be repaid.

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What Are the Features of Personal Loans?

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Here are some key features of personal loans:

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Personal loans are granted based on the borrower’s creditworthiness, assessed through their credit history or report.
Funds from personal loans can be used for any purpose.
Its loan tenure is flexible, ranging from 12 months to 60 months, based on your preference.
Many lenders offer instant disbursement options, providing funds within a few hours.
Factors like your income, repayment capacity, and financial profile determine the loan amount.

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Difference Between Instant Loan Vs Credit Card

The following table shows the difference between instant loan vs credit card:

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Accommodation Table

Parameters	Instant Loan	Credit Card
Loan Tenure	3 months to 24 months	30 to 45 days
Application	Requires a loan application process	No separate application needed
Loan Process	Quick approval with minimal documentation	No approval needed for usage within the credit limit
Loan Disbursement	The loan amount is provided as a lump sum, either credited to the customer’s account or issued through a cheque	Funds may be disbursed as a cheque or transferred directly to the account
Loan Amount	Fixed amount based on eligibility and need	Generally, two to three times of your monthly salary

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Difference Between Instant Loan vs Personal Loan

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The following table shows a comparison of instant loan vs personal loan:

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Accommodation Table

Parameters	Instant Loan	Regular Personal Loan
Eligibility	Based on income, credit score and other criteria of lender	Requires detailed credit assessment, including income, credit score and employment status
Loan Tenure	Short-term, usually ranging from a few days to a few months	Longer tenure, typically 12 to 60 months
Application	100% digital and paperless, completed in minutes	Online or offline with more documentation requirements
Loan Process	Quick approval with minimal formalities	Detailed evaluation process, which may take a few days for approval
Loan Disbursement	Funds are disbursed instantly to the borrower’s account	Disbursed within a few hours to a few days, depending on the lender
Loan Amount	Lower loan amounts	Higher loan amounts, depending on income and repayment capacity

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When Should You Take an Instant Loan?

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You should consider taking an instant loan when you need quick access to funds for urgent financial situations.

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These include emergencies like medical treatments, unexpected travel expenses, car repairs, or any sudden financial gap that cannot be managed with your available savings.

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When Should You Take a Credit Card?

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A credit card loan is ideal when you need a small amount of money and can repay it quickly. It suits short-term financial needs with a quick turnaround.

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When Should You Take a Personal Loan?

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A personal loan is the best option when you need a larger sum of money and want a longer repayment period.

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The Bottom Line

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Choosing between instant loan vs credit card vs personal loan depends on your financial needs and preferences.

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If you require quick, small amounts for short-term use, an instant loan or credit card might be the best option.

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However, for larger sums and longer repayment terms, a personal loan would be more suitable.

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You must carefully evaluate your situation and select the option that aligns best with your financial goals.

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If you have decided on an instant loan, apply now with Jar!

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Frequently Asked Questions

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1. Which has higher interest rates: a credit card or an instant loan?

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Credit cards generally carry higher interest rates than instant loans. However, interest on credit cards applies only if you fail to pay your dues within the specified time.

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2. How can you apply for an instant loan?

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To get an instant loan, you can apply online through a bank, lender's website, or mobile app, like the Jar app.

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You will need to submit the necessary documents, and once approved, the funds will be transferred to your account quickly.

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3. What is the credit card limit?

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The limit on a credit card varies from one person to another. The bank determines it based on your financial profile and credit history.