5 Questions To Ask Before Applying For A Personal Line Of Credit
It’s not very difficult to get a personal loan these days; in fact, you can avail it for almost anything including buying your favourite gadgets, to clear high-interest debt or to even fund a vacation! But, it is important that you make the correct choice of credit to reduce your debt load as much as possible.
This is where a personal line of credit comes in handy. A personal line of credit is a unique product introduced by Bajaj Finserv which helps you manage your cash flows in a better, more effective way.
Here are the 5 questions you must ask before applying for a personal line of credit.
Q1. What is a personal line of credit and what’s the interest rate charged on it?
A Personal Line of Credit is an innovative product wherein the lender offers you a fixed amount credit line, which can be withdrawn as per your convenience. The EMI you pay each month only comprises the interest component of the actual amount utilized, while the principal amount of the total loan/line of credit can be repaid after the expiry of the loan’s tenor.
Usually, the interest rate charged for a personal line of credit may be about 14% or higher. The exact rate offered to you will depend on your credit score, but, you can consider having received a good deal if you get a rate between 14% and 16%.
Do remember that irrespective of your rate of interest, your EMI will only comprise the interest charged on the withdrawn amount.
Q2. What’s the eligibility criteria for a personal line of credit?
The eligibility criteria for availing a personal line of credit depends on the lender. Bajaj Finserv considers the following factors before approving your personal line of credit:
- You must be an Indian citizen residing in any of the 40 cities where the offer is currently available
- You must be a salaried person serving as an employee of a multinational, private or a public company
- Your monthly salary should be higher than the minimum bracket defined for the city you live in
- You should be between 25 and 58 years of age
Q3. What are the advantages of availing a personal line of credit?
A personal line of credit can prove to be a beneficial source of financing. Some of the major advantages of availing a personal line of credit are:
- You are only required to pay the interest on the utilized amount as your monthly EMI. You can manage your finances better as the principal component is due only at the end of the loan’s tenure
- The entire process happens online and you can keep a tab on your account. Besides, you can withdraw money and make partial prepayments anytime based on your needs
- There is no restriction on the number of part prepayments and there aren’t any extra charges applied on them either
- You are free to convert your personal line of credit into a term loan anytime you want
- No extra charges will be levied on withdrawals
Q4. What’s the tenor available on such credit?
The minimum tenor for a personal line of credit is usually 12 months. The borrower can always apply for a renewal, or have the line of credit converted into a term loan at the end of the tenor.
Q5. Can a lender block my use of a line of credit at any point of time?
The lender may put restrictions on your withdrawals from the personal line of credit in scenarios such as:
- In case of EMI bounce
- In the event of any change in your current employment status
- If you change your contact details without notifying the authorities concerned
- If there is a drop in your credit score
A personal line of credit is often seen as a more flexible version of a personal loan and can help you meet your financial objectives. Learn more about a personal line of credit and see how you can apply for one to lower your EMI by up to 45% with Bajaj Finserv.