When it comes to availing funds to meet emergency financial requirements, you can choose from between a few viable options. If you are a credit card user, the easiest solution would be to avail a loan against your credit card. With India being home to around 52 million credit card users, according to a January 2020 Financial Express report, the demand for such loans has spiked in recent times.
However, before opting for such a loan, it is crucial that you determine your exact monthly repayment liabilities against it. In this regard, using a credit card loan calculator for the process can be extremely helpful. It is also crucial to understand various intricacies associated with a loan against a credit card before proceeding with the application.
How Does A Credit Card Loan Work?
Credit cards come with a pre-approved limit, which is different for every user, depending on their CIBIL scores and other factors. During a financial emergency, one can convert this pre-approved limit into a loan as well. One of the biggest benefits of a loan against credit card is that the principal sum is pre-approved, which may not be the case for a typical personal loan.
Therefore, when you are in need of cash, turning to your credit card issuer for assistance is a valid option. Still, you must ensure that you use a credit card loan calculator beforehand to determine the EMIs to be paid as repayment liability.
How do EMI Calculators Help Credit Card Loan Borrowers?
A credit card loan calculator is a unique online tool that can determine your monthly instalment values, which go towards servicing the outstanding dues. Most importantly, you can compute your card loan EMIs even before availing the said credit.
How to Use Credit Card Loan EMI Calculator?
Operating these online tools is quite simple. All you need to do is to enter the various terms and details of your loan.
Below are the steps you will need to follow to use this calculator –
- Step 1: Search for a “loan on credit card calculator” online. Choose one and open the page.
- Step 2: In the appropriate field, fill in the loan amount.
- Step 3: Enter the rate of interest offered against the said loan.
- Step 4: Pick a repayment tenure and enter it in the appropriate place.
- Step 5: Click on calculate.
As you click calculate, the credit card loan calculator will not only determine your monthly liabilities but also reveal the total cost of the loan (principal amount + total interest amount). Some bank’s calculators even provide the entire amortization schedule for the loan availed, detailing how much principal and interest you need to pay for any given month.
Benefits of Using a Credit Card Loan Calculator
While you can compute the EMI payable against credit card loans without using a calculator, doing so may lead to errors. Taking advantage of these tools is beneficial for the following reasons –
- Reliable and accurate calculations.
- It is available for free and can be utilised for any given number of times.
- Much faster than calculating manually.
- Immensely useful when comparing offers from several lenders.
Now that you know everything about credit card loan calculators, it is time to understand a bit more about such loans in general.
Eligibility Criteria for Credit Card Loan
While exact requirements tend to vary from one bank to another, listed below are the common eligibility criteria that you must follow when availing loan against your card.
- Most banks offer loan against credit cards to new and existing customers. However, some may only offer to existing credit card-holders.
- Only applicants with a valid credit card can avail this loan since the pre-approved limit on such a card translates into the pre-approved loan amount.
- Your credit score is a vital determinant when availing such loans. Generally, scores beyond 750 in a CIBIL report can help you to avail a loan without hassle. A less than desirable score might get in the way of availing the loan amount of your choice.
- High monthly income can help you avail the best credit card loan offers, where the principal amount tends to be significant. Moreover, one can also avail a top up loan beyond their loan against the card, in the event that their earnings are high enough.
Your card provider may have additional requirements when it comes to availing a credit card loan. You can inquire about the same directly with your lender or look for specifics online.
Documentation Process for Credit Card Loan
If you are an existing credit card-holder, you do not need to furnish any additional documents while availing a loan on the card. This is one of the factors, which makes credit card loans a go-to option in terms of financial emergency. Since applicants already have pre-approved offers, they can simply apply for the financial aid and receive the same within a day or two.
Advantages of a Credit Card Loan
Thousands of credit card users avail such loans every year to fulfil cash shortages. Below are some of the benefits of availing the loan in question –
- Loan amount disbursement takes place within 24 hours in most cases, which ensures quick access to funds during emergencies.
- No need to undergo a lengthy and convoluted documentation process, unlike most other loans.
- With a pre-approved limit available, borrowing against a credit card is extremely convenient when compared to most other unsecured loans.
- Banks levy lower interest rates on these loans when compared to credit card cash withdrawal charges, which tends to be significant.
Nevertheless, one must also account for the drawbacks of availing such loans.
Disadvantages of a Credit Card Loan
If you are about to avail a credit card loan, you should take a moment to go through some of its drawbacks.
- Your credit card limit will be blocked during such a loan’s repayment tenure.
- Banks determine whether you are eligible for these pre-approved offers, and not every cardholder can avail one.
Furthermore, gold loans and personal loans tend to be cheaper options when compared to the interest rates offered against these credit card loans.
Therefore, these loans may not be suitable for your specific needs. If you desire uninterrupted usage of your credit card, along with better terms for your loan, opting for a secured gold loan can be the much better alternative. Reputed lenders like Rupeek Fintech Pvt. Ltd. have made availing gold loans an especially convenient option when it comes to emergency funding.
With benefits like minimal documentation, substantial LTV, doorstep loan facilities, 30-minute disbursal and much more, these gold loans make for a much more attractive funding option, as compared to credit card loans. Alongside, with this loan option, you can avoid having to bear considerable interest charges, minimising your repayment burden significantly.
So, you can easily opt for a gold loan to meet all your funding needs without abandon, and do away with the hassles of availing a loan against a credit card.