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Is it Advisable to Take a Car Loan Against Your Credit Card?
Finding a suitable car finance option has become easy since lenders are offering various loans to buy vehicles. Among these, a popular choice is taking a loan against a credit card. You might wonder why you should opt for this when credit cards already come with the cash withdrawal option. Well, the simplest answer is that a vehicle loan against your credit card offers a lower interest rate than cash withdrawal. You may use a car loan EMI calculator to quickly determine how much it will cost you. Moreover, the loan amount is not restricted by the card’s withdrawal limits, ensuring you get the funds required to buy your dream car.
How to take a car loan against a credit card
Before opting for a loan against your credit card to buy a car, it is important to understand how the process works. Below is a list of guidelines to remember.
The car loan eligibility depends on multiple factors when you are taking it against a credit card. The criteria include the following.
- Credit card account: You must have a credit card account to get the loan against it. Most lenders provide finance to both new and existing cardholders. However, some financial companies approve the loan application for existing credit card users only. Find out the regulations applicable to your lender before availing of one.
- Good credit history: Getting a car loan with a low credit score is quite challenging. You may get car financing against a credit card only with a good credit history. If you have been paying your credit card bills in full and on time, you might have a strong credit score.
- High income: Having a high income might not be a strict eligibility criterion for vehicle loans, but it undoubtedly improves your chances for approval.
- Documents required
Document requirements vary among lenders. However, the following documents should suffice for most companies.
- Address proof like passport, telephone bill, electricity bill, or driving license.
- A few recent passport-sized photographs.
- Identity proof such as Voter ID, Permanent Account Number (PAN) card, or passport.
- Salary slips of the last three months if you are a salaried employee.
- Attested copy of Income Tax Return (ITR) and PAN card if you are self-employed.
A loan against a credit card is a type of personal finance, and therefore, the interest rates charged on this option are on the higher side. To get competitive rates of interest, you can consider applying for a car loan online from a reputed lender like Mahindra Finance. The non-banking financial company (NBFC) offers car financing with quick disbursement, affordable interest rates, and easy documentation. Visit their website to avail of your vehicle loan today.