We often find ourselves in a financial pickle and need funds urgently. During a financial emergency, personal loans become our companions. If you are a credit card user, you can come out of a financial emergency. One can always use the available credit limit as emergency funds and repay it later. However, not many credit card users know that they can also get a loan via their card. Credit cards can help you get a personal loan from the same or other banks. Read on to know the eligibility criteria for getting a loan against credit card.
Understanding the concept of loan against credit card
Many people think that getting a loan via credit cards means an increase in the credit limit. Getting a loan via your credit card has nothing to do with your credit limit. You get funds via a loan in your bank account and not in your credit limit. Some banks may also offer a cash loan to a credit card user. Loans against credit cards are unsecured, like personal loans. Also, the documentation process is simpler for getting a loan via your credit card. Consider you are a credit card user in India. Since you are a customer of the bank, it already knows your creditworthiness. The bank will not face issues in calculating your credit score and repayment capacity as you are already a customer.
People prefer getting loans against credit cards due to lower interest rates. Compared to other loans, loans offered to credit card users have a lower interest rate. Not to forget, the simple documentation process also motivates people to get a loan via their credit card. The disbursal time also comes down when you apply for a loan against your credit card. It is better to apply for a loan from the same bank which is your credit card issuer. By doing so, you have greater chances of getting your loan application getting accepted.
Do credit score and credit limit play a role in getting a loan?
Banks have to determine your repayment capacity before offering a loan against your credit card. The limit of credit cards in India is also determined via the credit score of users. Sometimes, banks offer a loan equal to the amount left in your credit limit. If you have outstanding balances on your credit card for several months, you may face issues getting a loan. Users are advised to maintain a good credit score and history to get a loan against their credit card. Make sure your utilization ratio is not more than 35% to get a loan easily. If more credit limit is available on your credit card, you might get a big loan from the bank.
Eligibility structure for credit card users to get a loan
The eligibility criteria for securing a loan against your credit card will depend on your bank. The general criteria for getting a loan against your credit card in India is as follows:
• Some banks may offer loans against credit cards only to existing consumers. You can cross-check with your issuer to know more about the loan rules.
• Apart from having a credit card account with the bank, you also need to have a good credit history and score to get a loan against your credit card.
• Sometimes banks promote the credit card level (like Silver to Gold category) of a user with improved income. Your credit card category/level will also play a role in getting a loan.
• The generic age limit for getting a loan against your credit card in India is between 18 and 65 years.
The process to acquire a loan against a credit card
Many banks offer a hassle-free process to secure a loan against your credit card. You can be asked to submit a few documents for getting a loan against your credit card. PAN card, Aadhar card, salary slip, and income tax return statement are a few documents asked for by credit card issuers.
You don’t have to visit the bank branch for getting a loan against your credit card. Many issuers allow users to apply for a loan against their credit card via the online portal. Choose the best credit cards in India to get unsecured loans easily!
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