All You Need to Know About Credit Card Loans

Nov 14, 2020

All You Need to Know About Credit Card Loans

Up until recently, the usage of debit cards in India was much higher than that of credit cards. However, with 2016’s demonetisation, digital payment processes have taken precedence along with an increasing need to fund regular expenses through debt, prompting the popularisation of credit card usage.

In fact, as per a report published in The Economic Times, the number of credit cards used in India jumped from 38.6 million in May 2018 to 48.9 million in May 2019, with a growth rate of 27%.

With the use of credit cards steadily increasing among Indians, credit card loans have also become popular means to avail funds to fulfil financial obligations.

Following is an elaboration on these loans against credit cards, and a look at other alternative loan options that you can opt for, with more attractive benefits.

Credit Card Loans – How Do They Work?

These loans are similar to personal loans in their functionality and can help to meet your financial obligations instantly.

Credit cards usually offer users a pre-approved credit limit, which can be utilised on a monthly basis. Credit card companies also provide users with the benefit of availing a loan against their credit limit, which can be repaid via EMIs.

Few of the features of such credit card loans include –

  • Since the limit available on credit cards are pre-approved, the loan against them can be availed without any extra documentation requirements.
  • With this loan facility, one can convert their expensive purchases into EMIs for the ease of repayment.
  • Since these loans are pre-approved, they are also disbursed instantly. Thus, one can avail insta credit card loans and utilise the funds to meet emergency requirements.
  • Credit card companies do not demand guarantors or documents like post-dated cheques to sanction this amount, thus making it accessible.

Nonetheless, these credit card loans also have a few limitations which can hinder their convenience as financing solutions. These are –

  • These loans are available against a high rate of interest. These rates are significantly higher than interest rates offered with secured loan options.
  • Late payment or EMIs towards this loan can have a negative effect on your CIBIL score. Furthermore, hefty penalties are incurred if the debt is not repaid in time.

Thus, availing such a loan against your credit card can prove to be costlier, while also making it difficult to manage finances affordably.

Keeping this in mind, you can look for suitable alternatives to avail financing for your requirements.

A gold loan, for instance, can help to meet all your financial requirements without imposing the aforementioned inconveniences.

What Makes Gold Loans a Suitable Financing Solution?

Gold loans, particularly those offered by Rupeek Fintech Pvt. Ltd., can serve as effective financial solutions which can help to meet all your requirements.

First, let’s analyse the benefits that gold loans bring over credit card loans

  • Competitive interest rates

Since these are secured advances are availed against gold as collateral, their interest rates are lower than several loan options, including that of loans against credit cards. Given their competitive interest rates, these loans can ease your repayment burden, making them more affordable as against credit card loans.

  • These loans can help to improve your credit score

Contrary to other loan options, gold loans can actually help to improve your credit score. Since these loans do not impose stringent eligibility criteria, they can be availed by all. Even those with no credit history or bad credits can opt for this loan to meet their financial obligations.

Furthermore, those without any prior history of borrowing can utilise gold loans and make timely repayment to build a favourable credit score, which can deem them credit-worthy for any future loan applications.

Apart from these, a gold loan availed from Rupeek brings several advantages like –

  1. Highest loan to value

Loan to value or LTV is the percentage of an asset’s total value that you can avail as a loan by pledging it as collateral. In this case, if your gold jewellery is valued at Rs. 5 Lakh and you can avail an LTV of 80% against it, then your loan value can go up to a maximum of Rs. 4 Lakh.

With this NBFC, you can avail the highest LTV which will help you to maximise your benefits from your gold ornaments and get a substantial amount by pledging it.

  1. Loan at doorstep facility

When you avail a loan from this company, you can not only enjoy the facility to apply online but also ensure completion of the process from the comfort of your home. You will simply need to make an application via the company’s app or website. A loan manager will then be appointed to visit your house and complete formalities like KYC registration and gold valuation. Your loan will then be approved if everything is in order.

  1. Instant disbursal within 30 minutes

After your loan is approved, it will be disbursed to your account instantly, making it the fastest available loan in the market. It takes only 30 minutes for the entire process to complete. Further, the loan manager remains at your house until you receive the amount in your account before collecting your gold and leaving.

  1. Security for your gold

Rupeek employs stringent security measures to ensure that your gold remains safe during the loan tenure. For instance, it is collected in a GPS-traceable bag from your house and is deposited at the nearest partner bank’s safety vault located within 3 km. The gold remains there until you re-possess it after the completion of your loan tenure and repayment of the loan liability. Furthermore, your gold remains insured in due course, for which you do not have to bear any additional expenses.

  1. Easy repayment

Another reason that makes a gold loan a better financial solution than credit card loans is its ease of repayment. With a gold loan, you will only have to pay a monthly interest amount, while the rest is paid through bullet payment at the end of your loan tenure.

It is much more convenient than paying a monthly EMI, consisting of both the principal and interest components. If lacking necessary funds, you can also defer the entire repayment amount until the tenure’s end and pay at a go.

Apart from these, a flexible tenure, minimal documentation requirement and pre-approval of the loan amount make gold loans the best financing option to meet any number of requirements without hassle. With the application process made completely online, accessing this gold loan is only easier now. So, apply today to fulfil your funding needs with the least hassle.

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