A line of credit can help when there is a situation where there is an urgent requirement of funds.
Features of a line of credit:
- Line of credit allows borrowers to access funds as long as the limit does not exceed.
- The borrower does not have to withdraw the entire amount at once. He/she can withdraw as required.
- The customer can repay the amount and restore the limit.
- You pay the interest only on the amount that is borrowed i.e. the outstanding balance and not the entire limit.
- The interest rate for a line of credit is between 10%-15% depending on the creditworthiness of the applicant.
Types of a line of credit:
Here the line of credit is of two types, secured and unsecured. In a secured one, the borrower has to provide an asset as security whereas, in the unsecured one, there is no security involved. The bank will fix up the limit depending on the credit history, income, and repaying ability of the borrower. Because of this, the unsecured line of credit has a higher rate of interest as compared to the secured line of credit.
In this, there are two types again personal or business. These can also be with or without security. The only difference is the usage of funds. Personal can only be used for personal and business only for business.
Go for a line of credit if you have a good credit history, there might be sudden business expenses, and you have an adequate amount of security to offer.
If you are in need of urgent funds for your business, contact Gromor Finance!