Personal Loan V/S Personal Line of Credit: A Comprehensive Guide
With summer vacations approaching, Rajesh wanted to borrow some money to fund a vacation with his family. But he was unsure about how much he needed at the outset. He was thinking about taking a Personal Loan. That’s when his brother suggested that he could apply for personal line of credit to fund his holiday plans. A personal line of credit is a borrowing option where you get a credit line from which you can borrow in parts. This proved beneficial for Rajesh. He did not get a lump sum of money. Instead, he received the funds in parts as and when he needed it.
What is a Personal Line of credit?
A personal line of credit is a credit source offered to customers who has a good CIBIL score. The lender disburses the funds over a period of time. You pay interest only on the actual amount that you borrow. This is a helpful financial aid if you have different credit needs at different points of time.
How is a Personal Line of Credit Different from a Personal Loan?
The biggest difference lies in the way the two are disbursed. Disbursal of the personal line of credit happens in parts. Meanwhile, you get the Personal Loan disbursal all at once. The interest rate is also constant for the Personal Loan. Moreover, the lender charges it right away, depending on the tenure and the loan amount. But, for the personal line of credit, the interest charges are slightly different. You only pay interest on the amount that you borrow each time.
Who is Eligible for a Personal Line of Credit?
A personal line of credit is an unsecured loan, much like a Personal Loan. To be eligible for this loan, you need to have a good credit score. You must be between the ages of 25 and 58 years. Moreover, you must have a steady source of income. You can check your eligibility on the Bajaj Finserv website. You would just have to submit your details.
How to Apply for a Personal Line of Credit
Applying for a personal line of credit is simple. Go online and fill in the application form. The lender typically gives spot approval. Once you agree to it, an executive from the lender’s office will call you. They will tell you about the document submission process. Following this, your credit line will be in place.
Personal Loan or Personal Line of Credit: Verdict
Personal Loans and personal lines of credit have different aims. They are useful for people with different financial requirements. So, opt for the correct financial tool based on what your need is. Also, check the expenses involved. See which option is cheaper. Do you know how to get a low-interest rate Personal Loan? Then opt for that, as it will reduce your total cost. Analyse all the parameters before you borrow.
The Bottom Line
Use the Personal Loan eligibility calculator available on Bajaj Finserv’s official website. This will give you an idea of your credit-worthiness. You will then understand where you stand. Based on your eligibility, analyse your financial needs. Weigh the pros and cons of both—a Personal Loan and a personal line of credit. Take your time and make the right choice.