Things You Should Be Aware of Personal Loan on Credit Card

Posted by Rakesh Khurana on May 13th, 2019

Nowadays, taking personal loan on credit card has become quite common. Being unsecured in nature, it is similar to personal loan. The only difference we observed is that a personal loan takes few days to get the approval while a personal loan against credit card is your pre-approved loan. So, if you are a credit card holder, you can apply for this kind of loan. Personal loan on credit card does not require any documentation, unlike personal loan. Hence, it is one of the quickest ways to get your loan approved.

Most of the lenders offer their customers personal loan against credit card at varying interest rates. And, that’s why today, credit card has become a fast paced business, as lenders offer this loan with comparatively lower rate of interest than personal loan. However, the quantum of loan amount you wish should not exceed your credit card limit. Hence, if you are looking for quickest and easy options to fund your needs, here are some things that you should be aware before opting for personal loan on credit card

Tenure: You can choose the tenure as per your convenience as most of the lenders offer this product on credit cards with a flexible tenure option. Hence, a borrower is free to choose the tenure depending on your requirements. Usually, lenders offer a maximum tenure of 24 months with different slabs of 6, 12, 18 and 24.

Delay in Repayment: You should avoid late repayments as it can severely affect your credit score, and your chances to get a top-up loan.  Well, in future too if you want to be eligible for this financial product, you must have a good credit history with no inconsistent payments. Hence, you should avoid any delay, or late in payments if you wish to get personal loan on credit card in the future.

Processing Fee: Most of the lenders charge some amount as a processing fee when you take a personal loan on credit card. Though the charges vary from one lender to another, hence you should not be quick to make a loan within a day. The minimum fee is charged of a particular sum or the percentage of the maximum loan amount.

Pre-closing:

Want to pre-close your loan? Well, borrowers can opt to pre-close their loan any time they want, without intimating your lender. Unlike personal loan process, in this, you don’t have to tell your lender about pre-closing. However, there are certain charges to it that you have to bear, termed as pre-closure charges. Hence, you can pre-close your personal loan on credit card anytime.

Credit and Loan Default is different: Most of the times, we have observed that people get confused between the impact of loan against card and credit card repayment. It is totally different. If you are declared as a defaulter, on the loan against credit card, it will be considered as a loan default, not a credit card defaulter. Well, being inconsistent with your repayments, and declared as a defaulter, can affect your CIBIL or credit score badly.

Well, if you are looking for a quick and fast unsecured loan, then we would advise you to opt for this loan against card. As mentioned above, unlike personal loan process, the rate of interest is low. Hope this information helps you! Happy Borrowing!