Line of Credit Loans
A line of credit loan allows you to apply for a loan up to a certain amount of money. However, you do not have to access all of this money immediately. You can draw on the money as needed up to your credit limit. You will not pay any interest on this type of loan until you have actually borrowed money and the repayment options are usually quite flexible. Read More >>
What Are The Advantages Of A Line Of Credit Loan?
A line of credit loan can give you peace of mind that you will have some extra money available when you need it. It can be used as a safety net for the times when you are could do with a little extra money. Even if its just to tide you over.
Once you have applied for a line of credit loan the money is there to use whenever you need it. You do not need to make a new application every time and this can make the whole process run much more smoothly. When you do need to draw on some of the credit that you have arranged to borrow. The money can be in your account on the same day as the request is made.
What Things Should You Be Aware Of?
The danger with a line of credit loan is that you will keep borrowing and never actually pay the loan off. Some lenders will stop you withdrawing any more money after a while. To try and stop you from getting into financial difficulties.
It may seem tempting to apply for the whole amount of the loan in one go. Even if you don’t really need that amount. However, if you end up spending this money then you may find that there is no money for you to draw on when you really do need it.
How To Apply For A Line Of Credit Loan
When you apply for a line of credit loan. You will need to provide the lender with the details of all your income and expenditure. In particular they will be looking to see whether you have a regular income. Therefore it will be useful if you are able to produce wage slips. The lender will use the information about your incomings and outgoings. This is to determine the maximum amount of credit that you will be offered. It may be useful to prepare a budget before the application is made. This will give you an idea of how much disposable income you have. Creating this budget will also let you know how much money you can put towards the repayments when you do draw on the line of credit.
Other things to consider
The lender is also likely to check your credit report. If you also check your own report before an application is made. This can give you a better idea of whether you will be accepted. The lender will want to see that you are up to date with all your other credit commitments. It can also help if you make more than the minimum payment each month. And that you are not too close to your credit limit. If you spot any mistakes on your credit report. These can be rectified before your application for a loan is made.
The lender will also need you to prove your identity. If you are applying for a loan in person then identification can be shown to the person who is dealing with with your application. If you need to verify your ID online. You may have to provide bank details or confirm other personal information. It will also help if you are on the electoral roll as this can be used to confirm your address.
If you manage your account well then some lenders may offer you the chance to increase the credit limit of your line of credit loan. If this is the case then you may be asked to provide some information from your initial application again such as proof of income. However, the whole process should be a lot easier and you will usually be given a decision almost immediately.