Personal Loan Vs Bank Loan: Which One Is More Convenient?

When you need money urgently, the very first thought that comes to your mind is taking a loan. But, should you go for an online personal loan through an app or take a bank loan? Although both of them can resolve your financial issues, personal loan apps have become a more accessible and faster method.


In this article, we’ll look at the main differences between a personal loan app and a bank loan to help you decide which one is the right choice for you.

What is a Personal Loan?

A personal loan is an unsecured loan, so you don’t have to provide any collateral such as gold, property, or assets. You can take a personal loan online via a personal loan app and get the money in your account within hours.

People usually take personal loans for:

  • Medical emergencies
  • Home repairs
  • Travel costs
  • Debt consolidation
  • Personal purchases

The fast processing and less paperwork make personal loan apps a go-to choice in emergencies.

What is a Bank Loan?

A bank loan is a traditional loan offered by banks and financial institutions. These loans require collateral, heavy paperwork, and good credit history. Bank loans are commonly taken for:

  • Home loans
  • Education loans
  • Business loans
  • Large personal loans

Although bank loans have a lower interest rate, the approval is more complex and takes longer.

Why Personal Loans Are More Convenient:

1. Quick Approval and Disbursement

Your loan can be approved within minutes through a personal loan app and deposited into your account within 24 hours. In comparison, bank loans take 7-14 days for approval and disbursement.

2. Less Documentation

For an online personal loan app, you need:

  • Aadhaar Card
  • PAN Card
  • Bank account information

Whereas, bank loans need:

  • Salary slips
  • Proof of employment
  • Income tax returns
  • High credit ratings

This is what makes personal loans quicker and more convenient.

3. No Collateral Required

Personal loans are unsecured, which means you do not have to offer any assets (like property or gold) as security. Bank loans, especially large ones, demand collateral, so they are less convenient.

4. Easier for Low Credit Scores

Personal loan apps often approve loans even if you have a poor credit score. They look at your:

  • Employment status
  • Income stability
  • Basic KYC verification

Banks, on the other hand, usually need a high credit score (750+) for loan approvals.

5. 100% Online Process

The entire process for a personal loan app is digital. You can:

  • Apply from your smartphone
  • Upload minimum documents
  • Receive cash in your bank account

Bank loans, however, require you to:

  • Visit the bank
  • Submit physical documents
  • Visit verification meetings

This makes personal loans more convenient for when you need urgent cash.

When to Use a Personal Loan?

A personal loan app is perfect when:

  • You need quick cash in case of emergencies.
  • You do not have collateral to offer.
  • You want a fully online process.
  • You have a poor credit score.

For small loan amounts and instant cash, personal loans are very convenient.

When to Use a Bank Loan?

You can choose bank loan when:

  • You need a high loan amount (₹5,00,000 or above)
  • You have a good credit score (750+)
  • You’re okay with longer processing times
  • You have collateral to offer

Banks can provide better interest rates for long-term loans like home loans or business loans.

Conclusion:

Choosing between personal loan or bank loan is all about your personal preference and needs. If you need speed and convenience, go for personal loans. And if you are in need of larger amounts, a traditional bank loan might be a better fit for you.

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