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02 September 2011

Prepayment Charges on loan on Credit Cards

Many individuals use the credit card for the reassurance of getting a loan approved immediately. In these times it is an advantage to have credit card companies offering loans at a phone call or email. For every usage of the credit card the consumer pays some amount extra as interest and administrative charges if they default in paying the bills on time. What happens when you have a loan from Credit Card Company and if you want to pre pay the loan?
Just like any other loan even credit card companies charge pre payment charges from the borrower. Since there are certain rules and schedules fixed by the credit card companies for repayment of these loans taken from credit card companies the customer also needs to pay certain amount as processing and administrative charges for the approval of the loan. This is just like a personal loan and though the interest rate charged is lower than other companies offering personal loans the borrower in case decides for pre closure or pre payment of the loan will have to pay charges for this.
Also when you apply for a loan your other cash withdrawal limit is cut down. Since you will require finance to pay off the loan taken your spending money available limit will also be reduced.
You may also need to pay taxes on this loan amount which will again add up to your repayment amount. In case of failure to repay the loan on time this will also give bad credit rating in your account which may later affect your other loan approvals.
Hence it is advisable to understand the procedures of credit card loans well before applying for a loan. And also discuss the prepayment procedures and charges in the beginning of your credit card loan. The other factors like withdrawal limits also need to be discussed since this will cut down the availability of hard cash for immediate expenses through credit cards.

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