Are Personal Loans Harder to Get Than Credit Cards?
The answer isn’t a simple yes or no—it depends on several factors like credit score, income, financial history, and even the lender’s policies. Let's explore the key differences, approval criteria, and why one might be easier (or harder) to obtain than the other.
Understanding Personal Loans vs Credit Cards
A personal loan is a fixed amount of money borrowed from a financial institution and repaid in installments over a specified period. It usually comes with a fixed interest rate, predictable EMIs, and a clear end date.
On the other hand, a credit card is a revolving line of credit. You're given a credit limit and can spend up to that amount, repay it, and use it again. Interest is charged only on the outstanding amount if you don’t pay in full by the due date.
While both offer access to credit, they serve different purposes and follow different approval processes.
Why People Choose Personal Loans
A personal loan is often chosen for:
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Debt consolidation
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Medical emergencies
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Home renovation
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Wedding expenses
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Education-related costs
Personal loans offer predictability. You know how much you need to repay every month and for how long.
Why People Use Credit Cards
Credit cards are more commonly used for:
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Everyday purchases
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Online shopping
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Travel bookings
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Dining and entertainment
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Emergency small expenses
They offer flexibility, rewards, and the option of paying the minimum amount due—although that can lead to long-term debt.
Are Personal Loans Harder to Get?
Yes and no.
In general, personal loans can be slightly harder to get approved for than credit cards. Here's why:
1. Stricter Eligibility Criteria
Lenders assess your creditworthiness thoroughly before approving a personal loan. This includes reviewing your:
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Credit score
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Income level
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Job stability
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Debt-to-income ratio
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Existing liabilities
Any red flags can delay or even deny the approval of your personal loan application.
2. Higher Loan Amount
Unlike credit cards that often start with a modest limit, personal loans involve disbursing larger amounts in one go. Because the risk to the lender is higher, the scrutiny is more detailed.
Why Credit Cards May Be Easier to Get
Credit cards are often easier to obtain—especially entry-level cards. Here’s why:
1. Lower Credit Limits
A credit card issuer takes less risk by offering a lower initial credit limit. If you default, the loss is limited compared to a defaulted personal loan.
2. Quick Approvals
Some banks offer instant credit cards to customers with salary accounts. The application process is often simple and fast, with minimal documentation.
3. Pre-approved Offers
Banks regularly provide pre-approved credit cards based on your spending behavior, existing relationship, or credit score. In contrast, a personal loan still involves a complete assessment.
Situations Where a Personal Loan Is Easier to Get
That said, a personal loan isn’t always harder to get. In certain cases, it might actually be easier or more beneficial:
1. If You Have a Strong Credit History
Applicants with excellent credit scores (750+) and stable incomes may find personal loan approvals quick and easy—sometimes within 24 hours.
2. If You Already Have a Relationship with the Bank
Banks are more likely to approve a personal loan for customers who maintain salary accounts, FDs, or home loans with them.
3. If You Need a Large Amount
When you require a larger sum, say ₹2 lakhs or more, a personal loan becomes a better—and often more accessible—option compared to requesting a credit limit increase.
Interest Rates: Credit Cards vs Personal Loans
A major factor in deciding between the two is the interest rate.
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Credit card interest rates typically range from 30–40% per annum if you revolve the balance.
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Personal loan interest rates are generally much lower—between 10–18% per annum depending on your credit profile.
So, while a credit card may be easier to get, it can become far more expensive if you're unable to pay off the balance each month.
Documentation: What’s Required?
For a Credit Card:
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PAN Card
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Aadhaar or Address Proof
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Salary slip or ITR (optional for pre-approved cards)
For a Personal Loan:
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PAN Card
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Aadhaar/Voter ID/Passport
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Salary slips (last 3–6 months)
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Bank statement
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Employment proof or business documents (for self-employed)
As you can see, applying for a personal loan often requires more documentation and verification steps than a credit card.
Which Is Right for You?
If your goal is to build credit or manage small expenses, a credit card can be a helpful tool. But if you need a lump sum with fixed EMIs and lower interest, a personal loan is often the better—and more responsible—choice.
Here’s a quick comparison:
| Feature | Personal Loan | Credit Card |
|---|---|---|
| Approval Time | 1-3 days | Instant to 1 day |
| Documentation | Moderate to High | Low |
| Loan Amount | ₹50,000 – ₹25 lakhs | ₹10,000 – ₹5 lakhs (limit) |
| Interest Rate | 10–18% p.a. | 30–40% p.a. |
| Repayment | Fixed EMIs | Flexible, minimum due option |
| Usage | One-time needs | Ongoing usage |
Final Thoughts
So, are personal loans harder to get than credit cards? In most cases, yes—they require more documentation, stricter eligibility checks, and longer processing times. However, they are safer, more affordable, and better suited for large, planned expenses.
The bottom line is: don’t choose between a credit card and a personal loan based on ease of approval. Choose based on what fits your financial goals. Whether it’s managing emergencies, consolidating debt, or making big-ticket purchases, both have their place.
If you're ready to explore the best personal loan options with competitive interest rates and flexible terms, visit Fincrif.com and get expert assistance today.
FAQs
1. Can I get a personal loan with a low credit score?
Yes, but the interest rate may be higher and approval may take longer. Some NBFCs offer loans to those with poor credit.
2. Is it better to use a personal loan to pay off credit card debt?
Absolutely. Personal loans usually have lower interest rates, making it easier to repay high-interest credit card dues.
3. Will applying for a personal loan affect my credit score?
Yes. Every loan application creates a hard inquiry. Too many inquiries can lower your score temporarily.
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