A line of credit is an open-end loan, one of several methods of getting funded after a successful loan application. It’s a bank – borrower agreement that allows you to withdraw up to a maximum amount, pay it back and borrow up to that amount again. You’d also be paying interest as you borrow.
The most enticing feature of a line of credit is that you pay interest only when you actually withdraw from the credit account, relatively more pleasant than traditional installment loans where interest payment starts counting immediately after you get bulk – funded.
Now, the internet has added a bit of sophistication to loans just as much as it has to everything else, making a line of credit even more efficient as a funding method.
Benefits of an online line of credit include:
With an online line of credit, you get to operate on your own terms, using a credit account or a credit card. Your money is available as you need it, where ever you are, so long your bank’s jurisdiction covers such location. It gets better; replacing funds withdrawn could be completed through online accounts like PayPal. This makes ‘waiting your turn in a banking hall’ a thing of the past.
You can also increase your maximum withdrawals by increasing the amount of money you pay back as you offset the debt; this simply is what open-ended loan means. Other loan products do have something similar to this feature but not as perfectly constructed as an online line of credit.
The process of application, acceptance, and funding, can totally be completed while you are on seated on your couch. This makes it a lot easier to access and with less paperwork.
In this IT age where virtually all processes are workable online, the older generation benefits from a stress-free funding process using apps on their phones and tabs and be done in a few minutes.
3. No Closing Hours
24-hour availability is a big plus, courtesy; online line of credit. You are able to apply and get funded during bank opening and closing hours. This makes business activities smoother.
Sometimes, cash flow is poor, knowing you have standby funds somewhere keeps you confident in making the next important business deal (including weekends).
A line of credit also comes in different fashions to favor the nature of your business or personal need. This feature is a general line of credit benefit, not specific for the online version.
A secured line of credit simply means you’d be offering collateral to your lender and its benefits are; lower interest rates and higher maximum withdrawal limit. A low credit score is also acceptable under this category. On the other hand, the unsecured line of credit doesn’t require you to offer any form of collateral, which is a big benefit to borrowers who have nothing to offer in the first place.
The drawbacks of this method are; higher interest rates, reduced withdrawal limit, and a relatively high credit score. Since there’s nothing to cease in this category, these bank-imposed drawbacks serve as a failsafe, should the lender be unable to pay up his debt.
5. Lower Rates
If you are taking an installment loan, there’s a stipulated time of payment and a fixed interest rate. This means the longer you are unable to clear the debt, the longer you will be paying interest. That, however, is not the case with an online line of credit. The flexibility that comes with this plan ultimately reduces your interest rates. Since you pay only when you have withdrawn some amounts, you won’t be paying any interest in periods when your credit is intact.
6. Opt Out Anytime With No Consequences
Another big effect of its flexibility, online line of credit gives you a chance to refund the money you borrowed, close the deal, and cease to be subject to the system.
All these features make the line of credit a special financial backup with little or no trouble. Although it’s not a totally infallible option to get funded, it’s still the best of what is available.
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