Personal Line of Credit
Line of Credits usually come at lower interest rates than personal loans & credit cards, making it one of the best choices for borrowing when looking for personal needs. Based on the uses line of credits have been categorized into two types, which is a personal line of credit and a business line of credit.
A line of credit provides you the ease to borrow money as per your requirement. No need to apply and wait for the approval like any other loans. The personal line of credit is easily approved and comes with a upper limit to borrow. You are free to withdraw or use money anytime anywhere within the approved credit limit.
A credit line allows you to borrow even in installments. The withdrawn amount can be repaid and borrowed again as long as you reach your credit limit. The best part about having a PLoC is you have to pay the interest-only for the money used. This provides borrowers flexibility which makes it different from a conventional personal loan.
How to Calculate Your Personal line of Credit EMI?
Calculating the EMI for your personal line of credit gives you an idea about the total cost of your borrowing. This can be done easily by using a Personal line of credit EMI calculator. This tool can be easily found on the portal of any LoC provider. Using this tool is very simple, you just need to provide your LoC details such as the credit amount and your personal line of the credit interest rate along with the time period for which you are borrowing .
As soon as you enter these details you will get to know your EMI. Knowing the EMI for the amount used will not only help you to manage your finances but will also make you aware of your future expenses through your LoC.
For example – You apply for a personal line of credit with MoneyTap, the credit limit approved to you is 2 lakh, so, here if you know the cost of your uses then you will definitely use it more carefully.
Know the Monthly Interest Percentage
While availing a PLoC try to calculate the percentage interest for the billing period. Divide the annual interest rate charged by 365 and then multiply it by the number of days in your billing period.
Calculate the Available Balance before any New Purchases
Even though you have a personal line of credit, using it properly is very important. Using it without any knowledge can lead to financial trouble in the future.
Hence, it becomes very important to know the outstanding balance on your card and make new purchases accordingly.
For example, if the limit of your card is 3 lakh, and you have already used 2 lakh and want to buy an iPhone with the remaining one lakh. This can be done easily as you have funds allotted on your name. But doing this will increase your EMI burden. Previously you were paying the EMI only for 2 lakh and now you will be paying it for 3 lakh. This can increase your financial burden, so think twice before you use your PLoC.
Know the Late Payment Penalties
When you miss any EMI or delays the payment for whatever reason, your lender charges penalties for it. Hence, knowing the terms & conditions related to your line of credit is very important. Avoiding these things can cost much and increase your financial burden in the future.
Uses of personal line of Credit
The Personal line of credit can be used for many purposes, below is the list for such purposes.
- To renovate your house
- To Pay urgent bills
- To buy gadgets
- To add cash in your monthly budget
- To finance your new two-wheeler
- For your car repair
- To buy gifts for your loved ones
In short, a personal line of credit can be used for many purposes. But it is very important to use it properly and know the fine prints before you sign the agreement. Remember getting funds when needed is hard but repaying the borrowed amount becomes even harder, when money is not managed properly.