What is a line of credit? Although you’re probably familiar with the term line of credit in relation to credit cards (it is the maximum amount of credit that you can use), you may not be familiar with a line of credit loan. However, a line of credit loan is quite similar to a credit card in purpose and function. It’s open-ended and lacks a set maturity date, so that you can be approved for a larger amount but only pay for the funds that you need. If you aren’t sure whether you’ll need additional funds, the flexibility of a line of credit loan could be ideal.
What Is a Line of Credit?
Although lines of credit come in a variety of different forms—overdraft protection, special purpose, discounting, purchase of commercial bills, etc.—today we’re focusing on line of credit loans. These flexible loans allow you to borrow as much money as you need (up to a specified limit). Sounds great, right? However, you might be wondering what else you can expect. To help you discover the possibilities and better understand your options, let’s discuss some basic facts about line of credit loans:
They are flexible. Most loans offer a set amount, which you borrow and then pay back at regular intervals. Line of credit loans, on the other hand, allow you to choose when you want to borrow funds, how much you want to borrow, and even if you want to borrow.
They are open-ended. This means that the loan has a varying balance, and it can be used multiple times. You will still have payment due dates, but the loan can be adjusted to fit your evolving financial situation.
They are revolving. Unlike an installment loan, a line of credit loan doesn’t have a fixed number of payments. Instead, like a credit card, you will be able to withdraw, repay, and redraw money whenever you like and how often you like until the expiration date.
They have variable interest rates. Your interest charges will fluctuate, moving up and down depending on how much money you borrow.
Line of credit loans aren’t typically used to fund a single, one-time purchase like a house or a car. Those major investments are usually financed by mortgages, auto loans, and the like. Instead, line of credit loans are great if you want to buy an item for which a bank wouldn’t normally underwrite a loan. For example, someone who is self-employed and can’t rely on a consistent paycheck each month might benefit from a line of credit loan. Or, someone trying to fund a wedding, which usually requires several large deposits (sometimes in cash), will appreciate having a flexible line of credit. They’re probably most popular with businesses, who enjoy the flexible access to cash advances.
If you’re interested in obtaining a line of credit loan, check out Advance Paycheck Online. We offer line of credit loans to residents of Illinois for up to $1,500. Our flexible payment schedules will help you pay off your loan responsibly, and we prorate the fees involved so that if you pay off the loan early, you will have very few fees to pay. In addition, we offer a refund policy so that you can rescind your loan and pay back the principal amount with no penalties or fees if you do so within 48 hours. To get started, please contact us online or give us a call at 1-815-436-4242. We would be happy to help!