Line of Credit in a Nutshell
A line of credit provides you access to a pre-set amount of money that a bank/lender or credit union agrees to lend you for a fixed period of time. The pre-set amount depends on your eligibility and repayment capacity. You can use/withdraw money from that pre-set amount as per your requirement, without any restriction. You have to pay interest only for the amount you use.
One can avail of a personal line of credit for any personal use such as to renovate a house, to pay some urgent bills or to add some money to their monthly cash flow. A credit line helps one to access money as per their requirement at the time they want.
Many people get confused between a line of credit and a personal loan. But, when you will understand both you will get to know that both have different features and works differently as well.
Flexibility is the Key of a Line of Credit
You can borrow/withdraw when you need the money and can pay it back through EMIs. You can repeat the process whenever required. You don’t need to apply for this again and again at the time of need like other loans. You need to apply just once and you are all set to fulfill your current requirements as well as future obligations. Just don’t use it for silly things, stick to the terms, most importantly paying off what you borrow on time and in full. This will help you to avail the services again.
How Long Does it Take to get Line of Credit Approved?
Applying for credit usually isn’t too hard these days, it can be availed online and offline as well. But when it comes to applying for a line of credit, your options may shrink as there are not so many providers for a line of credit. You have to check online and select one as per your requirements. After you select, just fill the form which is available online on the lender’s website. You need to provide some personal information in the fields mentioned in the form. The next step starts from the lender’s end which is application processing. Generally, you can expect approval quickly, this is because the processing is done online through automated algorithms and software. The credit approval completely depends on your eligibility and the information filled in the application form.
Mostly credit line approval is a matter of minutes. But sometimes, approval may take a couple of days. This can happen if some information provided by you may not match with your profile. This can also happen when something goes wrong with your application. The approval for your LoC firstly depends on how quickly you provide correct information through the form. If everything went well, and you fill the form correctly, your credit line will be approved within minutes.
How to Apply Online for a Line of Credit?
A line of credit provides you money on demand through banks & NBFCs. This can be availed online by visiting the portal of any credit line provider and applying there. The process is simple and needs basic documents such as ID proof, Address proof, and income proof. One can withdraw on it up to a maximum amount as per the need. Repayment for the borrowed amount is made through EMIs as like any other loans. One major benefit of having a line of credit is you only pay interest for the borrowed amount rather than paying on the preset withdrawal amount. Once you repay the borrowed money, your maximum limit/amount is again available for you to borrow from.
Uses for Lines of Credit
- Personal lines of credit can be used for any personal thing, promising you will repay it the fixed tenure.
- Home renovation, marriage, medical emergencies are the most common things where one uses a line of credit. Apart from this, there are other fields too where one can use LOC.
- LoC is most helpful for people with irregular incomes. Having a line of credit allows them to pay their regular monthly bills and expenses. The money borrowed from LOC can be repaid then they get money easily through EMIs. This fulfills their daily needs without putting any financial pressure on them.
LoC is the best option for you when you are facing a financial crisis regularly and have expected income nearly. Adding to it, the interest rate of LoC and flexible repayment options make lines of credit worth considering.