A personal loan is a loan where a person does not pledge or provide any sort of collateral against the loan. Also, while it requires minimum documentation, personal loan interest rates tend to be on the higher side.
Personal loan eligibility
Many people avail of this loan against their credit card as the deal is pretty lucrative with personal loan interest rates ranging from 10% – 15%; the important part is that you become eligible for this loan just by your credit score against the credit card.
A credit score is a score given to a person from the government authority CIBIL (Credit Information Bureau India Limited. The things considered while calculating the credit score are existing payments track record, default summary, applied loan applications to various institutions and the credit limit where the score of or above 750 is considered excellent.
Depending on this score, the bank will offer EMI, tenure and loan amount to the person. Apart from the credit card on which the loan is availed, all other cards from other banks are also considered. Hence, if you have a good track record on one credit card and a bad track record on the other, it can affect your overall credit score. Even the previous purchases and their repayments are considered while calculating the person’s credit score.
Banks also consider the unused limit in the credit card while providing the personal loan.
Based on the above criteria, one can avail loan against a credit card.
The benefits of availing loan on a credit card are that –
- You get instant funds in your account, which can be beneficial in the event of emergencies
- Timely payments can help improve your credit score
- Based on your bank, you can get a grace period without interest of 60-90 days.
- The funds are instantly credited to your savings/current account if you have the same bank for both your credit card and account. However, if you have an account with a different bank, you will get a demand draft or a cheque.
Rate of interest and other personal loan components
To calculate the interest for the said loan, one can use the personal loan EMI calculator, which will show you the interest component and, depending on the tenure, will help you know the month on month EMI bifurcation in principal and interest. This not only gives you the interest rate but also lets you know what amount you will spend on the interest, and to negate that, one can try to close the loan with a lump sum amount paid which will save your interest money.
One can easily check the eligibility, tenure, interest rate, etc., by logging into the net banking account. In the offers section, one can always see the personal loan offered against the credit card along with the personal loan EMI calculator, which will process the exact amount, interest charge and tenure offered by the bank. It will also show the processing fees that the bank will charge for the process of providing and availing the loan.
Thus, getting instant funds in your account is now easily possible with a personal loan against your credit card. If you have any doubt regarding the interest rate, you can always contact the bank and the relationship manager will help you with all the processes and get the best out of the whole deal.
