What is a Personal Line of Credit?

There are a number of financing options available to borrowers. Usually, one has the option of borrowing from friends or family or approaching a lender for a loan. And while personal loans are great at meeting a variety of needs, there is one option which you may not have heard about – Line of Credit.

Personal Line of Credit explained

A personal line of credit is nothing but a flexible loan which is provided by the financial institutions to a person. The functioning of the personal line of credit is a bit different than that of a personal loan.

While a personal loan is a fixed amount lent to the borrower with a promise of interest being calculated on the entire amount periodically, a line of credit is a specific line of financing extended to the borrower based on his or her eligibility. The borrower can then withdraw as much as he needs from this amount at his convenience and pay interest-only EMIs only on the amount borrowed. The principal line assigned to you can be paid back at the end of the tenor as a lump sum.

To avail a line of credit for personal use, you can opt to approach banks or various Non-Banking Financial Companies (NBFCs), which are offering this facility.

When is the Personal Line of Credit most useful?

The line of credit ensures that the problem of borrowing a loan periodically and repaying it in a tedious manner is taken care of. The line of credit offers you flexibility – it lets you take as much as you need without wasting precious time in reapplying to the lender, and it gives you the benefit of convenience – you are charged interest only on the amount you are using.

The primary use of a personal line of credit is to prevent your life from being obstructed because of financial issues. To keep your financial health stable and to allow you to do more without the stress of loans.

Bajaj Finserv, India’s most diversified NBFC offers line of credit at attractive interest rates and a host of other benefits. If you are looking for financial assistance, it makes sense to see what they have to offer.