New money is the next big thing in India. With demonetisation, the nation is looking out for alternative ways to deal with money. To help you handle this change, banks and lenders are updating their product portfolio. And, credit cards are certainly one of the most sought after banking products.It doesn’t just offer easy and convenience of spending, but it also provides facilities like loans.
In the article, we take you through the advantages of loan on credit card.
The definition: Loan on Credit Card
Credit cards offer cardholders a pre-approved loan, which is set within their credit-spending limit. It works like any other loan, where the bank (issuer) lends the loan amount to the user, which one has to pay at a later date. These loans, too, are issued against interest rate. The loan against credit card works like Personal Loan and can be used to finance one’s immediate requirement.
The features: Loan on Credit Card
Just like other loan, the features of loan on credit card too vary from bank to bank. Here are few common and basic features of Loan on Credit Card:
1.Ease of documentation
The good news of taking a loan on credit card is that it requires minimum or no documentation. Since it is a pre-approved loan, it is processed without any KYC paperwork. However, in case some banks insist on paperwork, then you will have to submit:
- A copy of address proof
- Passport size photographs
- Last 3 months’ salary slips and a copy of ID proof for salaried employees
- An attested copy of the latest ITR for self-employed
2.Quick disbursement and application
The loan on credit card is disbursed or given almost immediately. This is due to its pre-approved format. This loan can also be applied online or over the phone.
3.EMIs on loan credit card
This loan is given within the spending limit of the card. This limit is decided based on the person’s income and ability to clear off the limit. Just like any loan, this loan has EMI on this pre-set spending limit, making it easier for one to pay for their expensive purchases. Further, some credit cardsgive its customers the levy to transfer balance amount on EMI from other banks, in order to help one clear the outstanding balance of loan on credit cards.
Like Personal Loans, credit cardsfall under the unsecured loan category. Thus, it doesn’t require any collateral for the loan. However,card issuers have stringent eligibility criteria, and require the cardholder to have a reliable credit history, purchase and repayment pattern to be able to qualify for loan on credit card.
The Interest Rate for loan against credit card varies from bank to bank. This rate can vary from 15 to 20 per cent. Further, the rate of interest on loan against credit card depends on the type of card (gold, silver and platinum). Next, the Interest Rate also weighs on one’s credit history and purchase pattern.
Overall, loan on credit card is easy to get and is charged minimum processing fees. If you need more information about loan on credit card or would like to apply for a loan, leave your details below and our executives will get back to you at the earliest.