Your everyday lifestyle expenses or upcoming big purchases like buying a car or an expensive laptop may sometimes require more money than what you have in your savings account. You may consider taking out a loan against your credit card in times like these. But before you use your credit card to take a loan, you must know about the terms and conditions, repayment process, charges, and other aspects of this type of loan.
Many people skip this step and make repayments for years without understanding the implications. So, let’s understand how a loan on a credit card works.
How does taking a loan on your Credit Card work?
Depending on your bank, taking a loan on your credit card can either be a simple or a demanding process. At IndusInd Bank you have a loan amount pre-approved on your Indus Easy Credit Card, so you can expect instantaneous disbursement. Moreover, there is minimal to no documentation involved, so the disbursement process is fast. The repayment period is long and flexible, ranging from a few days to several months. Many reputed banks offer competitive and attractive and competitive interest rates for Credit Card Loans. The repayment amount, however, depends on your unutilised credit limit.
Benefits of Taking a Credit Card Loan
Now that you know how a Credit Card Loan works, let’s look at some advantages of taking this loan.
Unlike other loan types like real estate, where you need to offer your property as collateral, a Credit Card Loan doesn’t require any security. This makes it an ideal choice for people who do not own assets.
Disbursing a Credit Card Loan is simple and doesn’t involve extensive documentation like other loans. All you need is your KYC documents and a cancelled cheque.
Flexible Repayment Period
The repayment period for Credit Card Loans is flexible, and you can choose a tenure that suits your repayment ability. Usually, the repayment period ranges from 2-4 months.
Lower Interest Rates
Interest rates on Credit Card Loans are lower than those of other unsecured loans like a personal loans. Also, some banks offer 0% interest rates for a specific period on Credit Card Loans.
Things to Consider Before Applying for a Credit Card Loan
It is also crucial to understand various factors to consider to decide which Credit Card Loan type will suit you the best. Remember these factors:
Most banks have a minimum income criterion and age limit for applicants. Some banks may also require you to have a specific credit score.
Tenure and Charges
The repayment period and interest rate are essential factors you must consider before taking a Credit Card Loan. Also, be aware of additional charges like processing fees that the bank might levy.
Your Credit Score and Repayment Ability
Your credit score is one of the primary eligibility criteria for taking a Credit Card Loan. A high credit score will help you get a lower interest rate on the loan amount. Moreover, ensure that you can make timely repayments without defaulting, as it will reflect poorly on your credit score.
A Credit Card Loan is an unsecured loan that offers many benefits like a long tenure, low-interest rates, and minimal documentation. It is crucial to compare different Credit Card Loans before availing one. Also, ensure you can repay the loan amount comfortably without defaulting to maintain a good credit score. If you are interested in knowing more about the pre-approved loan facility on your IndusInd Bank, visit us today!