6 Things to Know About a Personal Line of Credit
Although a fairly new concept in India, personal line of credit is fast emerging as an alternative loan option for a large number of borrowers. Some of the reasons contributing to its increasing popularity are easy accessibility, flexibility and better interest rates compared to other alternatives such as credit cards.
Here are the five things you should know about Personal Line of Credit:
How Does a Personal Line of Credit Work?
A personal line of credit is a predetermined credit line extended to you that can be used as per your needs. Unlike a regular personal loan where you are charged interest on the complete loan amount, a line of credit only charges interest on the amount you have utilized. What’s more, your EMI only comprises the interest component of the amount used. The principal is due only at the end of the loan tenor.
You are also free to use the available line of credit to whatever extent you want and make prepayments of any size as long as they are over and above the minimum monthly payments set by the lender. In India, Bajaj Finserv is a trusted provider of personal line of credit.
With a personal line of credit, you only pay the interest component of your loan as the EMI. This means your monthly instalment can be as much as 45% lower than the EMI on a term loan on the same amount. This means you can save more and manage your finances better.
Similar to Overdraft Facility
A line of credit is similar to the overdraft facility provided by banks and other lenders. Any time you reach a negative balance in your account, the bank steps in to cover your payments and then charges you a certain interest rate (and possibly a fee) for the overdraft service. In case of a line of credit, the fee is taken out of the equation and the interest rate is comparatively lower.
Very Easy to Use
In most cases you can use your line of credit account just like a regular one - you can withdraw cash at your convenience and repay it when you can. The simple application procedure offered by Bajaj Finserv, as well as the numerous benefits on offer make it one of the most obvious choices for financing today.
No Collateral Required
Since a personal line of credit works as an unsecured loan, you are not expected to present a collateral or security at the time of availing the loan. Lenders such as Bajaj Finserv gauge your creditworthiness by studying your credit report. You can avail a loan as long as you have a sufficient CIBIL score and your profile meets the eligibility criteria laid down by the lender.
No Limit on Part Pre-payments
There is no limit on the number of part pre-payments that you can make on your personal line of credit. Bajaj Finserv also does not charge you for part pre-payments or drawdowns that you make.
With a number of attractive benefits on offer, a personal line of credit is emerging as the preferred means of financing today. Learn more about Bajaj Finserv Personal Line of Credit and see how you can apply for one today.