Personal loans are mainly used to handle emergency expenses. Most people use personal loans as a last resort when all the other options are exhausted. Due to this, disbursal time is one of the most important factors when it comes to personal loans. Typically, banks provide personal loans with very minimal documentation. If you already have a credit card, the process becomes even easier. Lenders provide instant personal loans against the credit limit you have on your credit card.
Who can get these loans?
These loans are available for anyone who holds a credit card. Almost all the top banks in the country including SBI, HDFC Bank, ICICI Bank, Axis Bank, etc., provide these loans for their customers. You can avail of this benefit by contacting the respective banks. Most banks provide these services only for their own customers. This means that an SBI credit card holder can get an instant personal loan only from SBI. Here, the loans are pre-approved by the bank and they are approved almost instantly.
How to apply for personal loans on credit cards?
The application process for personal loans on credit cards is simple and straightforward. Banks provide detailed information about these products on their official websites. You can visit these websites and apply for a loan on your credit card. The application process is given as follows:
- Visit the official website of your credit card service provider. Locate the personal loan section where the bank offers a personal loan on a credit card.
- Click on the ‘Apply’ button to initiate the application process.
- Fill in your personal details including name, mobile number, email ID, the purpose of the loan, etc. You must also provide your credit card number and its expiry date.
- Once you have filled in these details, you can proceed to your account and apply for the desired loan amount. Some lenders offer instant loans within your existing credit limit. However, there are also lenders who provide loans over and above your existing credit limit.
- After the completion of the application process, the bank will credit the loan amount in your bank account within the time limit mentioned. Usually, approval is provided instantly. However, it could take a day or two to get the money in your account. Hence, you have to plan your expenses accordingly.
Interest and charges
The interest rates charged for these loans are similar to the regular personal loans offered by these banks. Typically, these interest rates range from 11% to 22% depending upon various factors. It is also likely to vary from one bank to another significantly. Factors like your repayment history, credit score, loan amount, loan tenure, etc., are taken into consideration while determining your interest rate. Apart from interest charges, you may also have to pay other charges like processing fee and service tax while getting the loan amount. The one-time processing fee typically ranges between 1% and 2.5% in most banks.
One of the advantages of personal loans is that they are offered with minimal documentation. Since most of these loans are pre-approved, lenders do not typically ask for your salary slips or income tax returns. In regular personal loans, lenders ask for post-dated cheques to minimize their risk. This is not the case with personal loans offered on credit cards. Here, there is no need to furnish any post-dated cheques to the lender since the loan is secured against the credit limit of the credit card.
Most lenders also provide the option to foreclose the loan before the completion of the loan tenure. By paying your loan in advance, you can live your life without any worries. However, there are some costs involved in foreclosing the loan. Most of the lenders charge a pre-closure penalty of 2% to 5% of the outstanding loan amount. If you don’t mind these charges, you can pay off your loan in advance.
Benefits of personal loans offered on credit cards
The main benefit of this loan is the quick turnaround time it offers for loan disbursal. If you are in need of cash on an emergency basis, you can sign up for this loan and get the desired amount. Credit cards generally offer cash withdrawal benefit for customers. Usually, a certain percentage of the credit limit is offered for withdrawal benefit. If you need cash over this amount, you can opt for personal loans from the bank. Since there is no documentation involved, you don’t have to worry about the hassle involved in the application process.
Most of the lenders in the market have simplified the personal loan application process for the benefit of customers. With a credit card, the personal loan process is simplified even further. However, not all credit card holders are eligible for these loans. If you are not sure about your eligibility, you may contact the customer service center of your bank and check with them.