You might have been eyeing a cool new smartphone for a little while, doing copious online research on price and features, asking friends for recommendations - and now think it is high time it became yours! You are in a good job, with a steady income and you are ready to take a ‘mobile loan’ in the showroom to finally own this brand new toy. The only question is – do you need a credit card to get a loan?
A credit card is not necessary for getting a mobile loan, but it certainly helps to make the loan approval process even quicker and smoother. If you are planning to buy the phone with a loan in the dealer showroom, then having a credit card can speed up the approval process. Why is this so?
Having one or more credit cards, accompanied by a healthy credit card history demonstrates that you are a responsible borrower who can be trusted to make repayments on time. When you have a credit card, it is much easier for potential lenders to evaluate your credit worthiness and approve your loan. If you apply for a mobile loan in-store through the dealer, you could walk out of the store with your new mobile in hand.
Advantage of taking a loan for buying a mobile phone
Having said that, it is not necessary to have a credit card in order to apply for a ‘mobile loan.’ While your loan may be approved quicker with a card, if you do not have a credit card, it does not mean your loan application will be rejected. In fact, if you do not have a card, taking a small loan to buy a smartphone can help build your credit profile and will help you become eligible for larger loans in the future.
Relationship between credit history and loan eligibility
If you do not have a credit card or loans in your name, you will not have a good credit score as you have no history of repayments. While it might seem a good idea not to have any debts, banks and other lenders want to see a long history of credit card and loan repayments so that they can evaluate if you make all your repayments on time. If you do not have a credit track record that they can evaluate, you might not qualify for larger loans. It is a good idea to start building your credit with small loans (like a ‘mobile loan’) that you can repay in full and on time. This way you can demonstrate perfect repayment behaviour and develop a good credit score.
With a solid loan repayment record and a good credit score, you can ensure that you do not face a problem in future when you apply for a larger loan to buy a vehicle or a house.