personal loan
Summary: Are you confused between a line of credit and a personal loan? This guide explains both options and helps you choose which one suits your needs.
A line of credit is a flexible loan offered by banks to individuals with a good credit history, allowing them to borrow money up to a predetermined limit. You may wonder why someone in good financial condition would need a loan. The answer is simple. Even people with a good credit history may face unexpected expenses or need immediate access to funds. This is where a line of credit can help. Let’s take a closer look at this financial term.
What is a Credit Limit?
A line of credit (LOC) is a form of unsecured personal loan that allows you to borrow money when you need it, pay it back, and then borrow more without having to qualify for another loan. Borrowing from a line of credit usually accrues interest. You must make a minimum payment, which will be transferred back to the credit limit you set at the time of payment. Once your cooling off period is over, you can start a payment schedule so you have time to pay off your debt. However, paying minimum payments can result in more interest charges in the long run.
Before getting a credit facility, check your credit rating and take steps to strengthen your credit health. A good credit history increases your chances of applying for a lower interest rate. Once you’ve done your balancing act, analyze how much you need and how you want to spend it.
How is a line of credit different from a personal loan?
Let’s start with how to borrow money. A common practice is to apply for a personal loan immediately. If approved, you will receive a lump sum payment. You must pay interest promptly, no matter when you spend it.
Credit limits work the same way. This gives you access to a certain amount of funds that you can borrow as needed. However, you only pay interest when you originate the loan. In this article, we will focus on lines of credit that are generally unsecured, meaning they do not require collateral.
A line of credit is similar to a credit card, home equity line of credit, or small business line of credit.
It is important to have a good credit score before applying for credit.
A better credit score can help you get a credit line with a lower APR. Some lines of credit also have fees, such as annual fees, and limits on the amount you can borrow. Once your credit limit is approved, you will be given a certain period of time to withdraw money from the bank. When you’re ready to borrow money, your bank can write you a check or special card, or transfer the money to your bank account.
Why is Firstmoney a premium credit limit service?
An industry first, FIRSTmoney from IDFC FIRST Bank is a more efficient, flexible and customer-centric alternative to standard lines of credit. You can now get unlimited withdrawal facility and approved limit up to INR 10 lakhs without any garnishment charges. You can withdraw money whenever you want, and equal monthly installments are paid only for the amount used.
Additionally, FIRSTmoney gives you a convenient time period option to repay the amount you borrow, from two months to five years. This means you can manage your finances effectively while ensuring you have money for your expenses! Additionally, FIRSTmoney has no impound fees, making it one of the most affordable options for meeting a variety of needs, such as travel plans, wedding expenses, emergency medical expenses, home renovations, and more, without having to pay additional termination fees. your loan early.
Lastly, if you have a credit score of 750 or higher and a steady income, applying for a FIRSTmoney loan is easy! All you need is your physical PAN card to complete the video KYC process while submitting your application online.
conclusion
So, while a line of credit offers more flexibility compared to a standard personal loan, FIRSTmoney from IDFC FIRST Bank ultimately proves to be a better upgrade due to its favorable terms. You can cover your expenses by withdrawing the required loan amount from the approved limit, choose a flexible range of repayment periods, and even order your debt comfortably without worrying about fees!
disclaimer
The contents of this article/infographic/image/video are for informational purposes only. The content is general and for informational purposes only. It is not a substitute for specific advice regarding your particular circumstances. Information may be updated, finalized, reviewed, verified, corrected, and may be materially changed. This information is not intended for distribution or use by anyone in any jurisdiction where such distribution or use would be contrary to law or regulation or which would subject IDFC FIRST BANK or its affiliates to any licensing or registration requirements. IDFC FIRST BANK is not responsible for any direct or indirect loss or liability incurred by readers due to making financial decisions based on the content and information mentioned. Consult a financial advisor before making any financial decisions.
The features, benefits and offers mentioned in the article are valid as of the date this blog was published and are subject to change without notice. The contents of this document are subject to other product-specific terms and conditions and third party terms and conditions, as applicable. Please refer to our website www.idfcfirstbank.com for the latest information.
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