Personal loan, credit card or BNPL


Consumer behavior and spending habits have changed after the covid-19 pandemic. Millennials in particular are increasingly turning to several micro-credit solutions to manage their needs and desires. You may want to take credit for vacations, big item purchases, or even hosting family receptions, among other things.

Adhil Shetty, CEO of, said: “Personal loans, credit cards and now even Buy Now Pay Later (BNPL) can help you raise funds to meet your needs and wants. When thinking about the right financing option, you need to understand their commonalities and the differences that set them apart to make an informed decision. At first glance, all three allow you to purchase products on credit and pay off in the form of Equivalent Monthly Installments (EMI). However, there are some critical distinctions that you should understand before availing of any of them. them.”

When you get a personal loan, it comes straight to your bank account. You can use this amount for all your wedding requirements, from buying luxury items to booking airline tickets for the holidays. The repayment term is generally standard and ranges from 1 to 5 years. The interest rate can range from 10 to 20% per year.

BNPL, on the other hand, can be used explicitly to make qualifying purchases which can be split into installments or refunded at a later date. BPNL might be the cheaper and easier to access alternative, and you might be able to get interest-free IME on BNPL. However, BNPL remains a growing segment and is primarily available on e-commerce, food ordering, ridesharing, travel booking, online grocery and service sites. This further means that BNPL may not be an end-to-end credit product that you can use in all situations. However, with a little planning, you can use BNPL in places where it could provide you with the best benefits, such as your travel reservation or other wedding-related purchases.

Credit cards sit halfway between personal loans and BNPL and have the ability to offer the best of both worlds. Shetty said: “You may be able to pay all of your expenses using your credit card as long as you have the credit limit. The outstanding balance can then be converted to EMI for 3 to 24 months, depending on the amount, l issuer and other factors, however, this can be an expensive proposition, with interest rates reaching 20%.

What you should do

As mentioned above, the three most common ways to finance your needs and wants are conventional personal loans, credit card borrowing, and the emerging trend of BNPL.

Abhishek Soni, CEO and Co-Founder of Upwards, said, “A personal loan is best when there are multiple expenses such as long vacation clothes, tickets, hotel reservations, etc.) for maintain consolidated repayments. Available through BNPL or credit card can lead to many problems with small loans or high interest rates, which is not ideal. “

Echoing similar views, Nitin Mathur, CEO of Tavaga Advisory Services, said, “Personal loans are more suited to full-price, all-purpose finance facilities. In comparison, the BNPL option is preferred for small purchases up to ??1 lakh and credit card limits are determined by the borrower’s bank based on a predetermined analysis. “

Mint to go

While all three are viable sources of funding your needs and wants, you should choose between them based on your eligibility, requirements, cost, usefulness of funds, and most importantly, your ability. reimbursement. Keep in mind that all three come with heavy penalties for late or missed repayments and can have a serious impact on your credit score as well. So have a repayment plan before you borrow, don’t blindly apply for credit, and borrow as much as you can comfortably repay.

In addition, it is also crucial to start saving for financial goals and not to burden yourself with loan repayments and EMIs.

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