Archive for February 2018

Line of credits is unsecured in most cases. This simply means that there is not collateral that can be used as a backup for the loan that is given. There is only one exception to this. It is the HELOC also known as the Home Equity lines of credit. This is a secured type of line of credit where the equity that is presented by the borrower’s home is used as a security. But, the working of this type of line of credit is the same as any other line of credits.

Line of credit like revolving accounts

When a person borrows money as a line of credit, he can spend the money when he/she needs. Once they spend it, it is necessary to pay it back. But, once the amount has been repaid they can spend it again. This cycle of borrowing money and paying it back does not have to end necessarily. It can continue to be on a never ending process. This makes the process a revolving one. Thus, a line of credit is one of the types of revolving accounts. Loans that are acquired as a line of credit or with the help of a credit card are opposite to the traditional types of loans like the signature loans or the mortgages. These loan amounts cannot be spent again once they have been repaid. Line of credit is one of the most competent and risk free method to borrow money in times of need. In order to know what is a line of credit, one can research through the countless articles that are available in the internet. A demand line of credit is a different type that is rare. This is quiet a risky one as the lender can decide to call upon the loan due anytime.

With this method the borrower should have to wait until the lender demands for the repayment of the funds borrowed or can make small payments on a monthly basis. This is not used by a lot of people as the conditions to this type of line of credit are strange. Basically, a person can use a line of credit to spend the money until the amount does not exceed the maximum amount allowed. This amount is usually decided by the financial institution issuing the loan. The requirements of the financial institution should be met by the borrower for the approval of the line of credit.

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