If you find yourself in urgent need of additional cash, you have a number of options – the traditional solution would be to go to the bank and apply for a loan with high interest rate credit cards, or borrow from friends or relatives. However, nowadays, the range of services offered by lenders has expanded and now you can apply for, for example, a fast loan, a credit line or a consumer loan in case of unexpected financial problems. There is a lot of talk about fast and consumer loans lately, but a credit line is a relatively new and slightly different type of loan, so before you decide on the type of loan that is right for you, you should understand all aspects of that loan.
What is a credit line?
A credit line is a type of short-term loan currently offered by both bank and non-bank lenders, and can be described as money given to a consumer to a certain extent by a lender and used at any time and for any purpose.
How is a credit line different from other types of loan?
A credit line can often be confused with other types of credit, especially credit cards offered by banks, but there are significant differences between this type of credit:
- In the case of any other loan, the creditor lends the money for a fixed period of time and the consumer must repay it in monthly installments until the entire amount borrowed has been repaid. A credit line is similar in nature to a credit card, only in this case, the loan is credited to a bank account and the borrower only has to pay interest on the part of the loan used and not on the total amount of credit.
- When borrowing with a non-bank lender for the first time, the maximum credit limit will be up to 1000 USD;
- The loan amount used is calculated at the daily interest rate;
- Most non-bank lenders have stated that when borrowing for the first time, there is no daily interest charge for the first 30 days;
- It is possible to increase the loan amount in case of a credit line.
When to Use a Credit Line
The credit line can serve as a kind of security for unexpected expenses. By applying for a credit line and getting these extra funds, you can be assured that in case of unexpected expenses you will have available funds to cover the costs incurred. In addition, you will only have to pay off the used portion of the loan, which means that by carefully planning your finances, this type of loan can be very useful for you in certain life situations.
How do I apply for a credit line?
Applying for this type of loan is simple – after you have considered all aspects of borrowing and your ability to pay, all you have to do is go to the lender’s homepage and fill out a loan application form. The creditor of your choice will then contact you. Borrow only what you need and plan your finances responsibly!