A personal line of credit is a flexible tool that helps you manage finance effectively without worrying about a rigid timely repayment. Under the line of credit service, the borrowers have to pay interest only on the amount that they utilise and not the entire amount which they borrow. Thus, one can see it as a tailor made credit option offered by the NBFCs and other lenders. Apart from the interesting aspect, several benefits come with a line of credit. Here are few of the benefits:
Effective Borrowing: A personal line of credit helps in effective borrowing. It makes sure that a borrower does not borrow an unnecessary loan and borrow effectively as per the need. Under the line of credit, it is a self-responsibility to make sure that the borrowing is utilised in the most optimum manner. Furthermore, a borrower does not have to pay interest on funds which have not been utilised; this makes it a much favourable option than a credit card.
Fulfilling Needs: Financial crunch occurs without prior notification. In the time of dire needs, a line of credit is of great help as it ensures that steady finance is available. It helps in fulfilling various needs such as medical expenses, educational expenses, automobile repair, and so on. Apart from this, there are several NBFCs which are even providing a specific business line of credit to meet business needs.
Bridging the Gap Effectively: Not many circumstances are more frustrating than the ones where you cannot meet the ends meet. For instance, you have borrowed a loan and are duly paying the EMIs. However, during the time of your financial need, you are falling short on funds. This is the time where a line of credit comes into play. It helps to bridge the gap effectively.
Also Read: Personal Line of Credit Basics
Flexible Repayment: Unlike other loan services, wherein you are required to pay regular EMIs, a line of credit works more flexible. A line of credit has to be refilled, and you have to maintain the limit by yourself. Thus, as per your convenience, you can refill the line of credit and maximise its limit. There are even online facilities which have been made available by the NBFCs, which makes repayment a lot easier.
Flexible Usage: A line of credit can be used flexibly. There is no obligation as to how you need to use the credit. Thus, you can allocate the funds for its optimal usage. A line of credit can be utilized in managing wedding expenses, education expenses, and automobile repairs and so on.
No Collateral: When opting for a line of credit, you do not have to submit any collateral. This makes it easily accessible to everyone with a decent financial standing.
When taking a line of credit, it is essential that you approach NBFCs before banks as they provide flexible options in comparison. Also, the policies are much broader, and the amount is more. Few of the highly rated NBFCs also provide bullet repayment options and zero charges on pre-payment.