If you are in urgent need of finance, think beyond credit cards and personal loans. Whether you’ve small expenses or larger ones, a line of credit gives you money on demand. It is usually sanctioned by banks and credit unions to existing customers who meet the eligibility norms.
A personal line of credit is like a loan. It is an agreement between you and the lender. The lender agrees to lend an amount, subject to an upper limit. You can withdraw funds any time, subject to the maximum limit.
Want to know more on Personal Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
Interest is charged only on the amount borrowed and not on the maximum amount allowed. The rate of interest on a personal line of credit varies across banks.
2. Associated costs:
3. Credit limit: Credit limit is the maximum amount that can be withdrawn. This limit varies across banks.
4. Unsecured personal line of credit:
An unsecured personal line of credit doesn’t require security or collateral. Compared to a secured personal line of credit, an unsecured personal line of credit usually has a higher interest rate.
5. Secured personal line of credit:
A secured personal line of credit requires collateral. The security can be savings account balance or certificate of deposit and so on. As a secured personal line of credit is secured against collateral, it has a lower rate of interest.
In case you fail to repay, collateral will be withheld. You may lose access to collateral, till repayment.
Money drawn from a personal line of credit can be used for any purpose.
7. Eligibility criteria:
The eligibility criteria to avail a personal credit of line differ across banks.
Banks offer a personal line of credit to high net-worth clients. To avail a line of credit, a decent credit score is a must. You must have a sizeable amount of money in your bank account.
1. Personal loan:
A personal loan is an unsecured loan. So, banks charge a higher rate of interest on these loans than most other loans.
2. Credit card:
A credit card is plastic money which enables you to borrow. A credit card is issued on a condition that you repay the borrowed amount plus interest, and any other charges that were agreed upon. The borrowing limit of a credit card differs across individuals. It is ascertained taking into consideration, credit rating.
What is the right move for your finances?
This totally depends on you. You must weigh the pros and cons of each type of credit available and go for the one that suits you best.
Be Wise, Get Rich.
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.