Credit line

A credit line is called a bank and a non-bank creditor service, which is a combination of a loan, an overdraft and a credit card. A credit line is a type of credit that allows everyone to quickly make extra money

What exactly is a credit line?

credit loan

Do you ask how this credit is different from a regular fast or consumer loan? Unlike these types of loans, the customer does not need to specify in advance the exact amount they want to borrow. All you have to do is tell your bank or lender what the credit line will be for and how long the credit will be available to the customer, and then the customer can use the bank account at the beginning of the credit line at any time. use as much money as his credit line says.

In a way, this is very similar to how credit card overdraft functions work, but a credit line is better than an overdraft because the customer can determine how long and how much money he or she will need to borrow from the lender, thus limiting the amount of overdraft and you will fall into heavy debt.

Secured by the credit line 

credit loan

When a customer decides to apply for a credit line and completes all necessary documents, the creditor contacted by the debtor will send to the bank account specified by the customer the amount of money requested during the credit line, which will be used by the customer, just like a bank account. If the customer uses some or all of the amount secured by the credit line during any one month of the credit line, the customer should slowly begin to repay the amount of the credit line.

After the minimum monthly payment amount has been refunded in a given month, the customer can reuse the credit line amount within the amount and term of the credit line himself or as determined by the creditor.

Of course, the amount you spend on a credit line can also be repaid faster , saving you interest on your credit line, since the credit line only gives interest on the amount you spend. But if you do not need to use the credit line amount and you have not spent a cent on the amount of credit granted, you will not have to make any payments as the money will not be used and the creditor will not lose it.

This means that basically a credit line is like a guarantee for everyone that if you need additional funds within a certain time frame, they will be available to you anytime and anywhere because they will be available in your bank account.

A credit line can be used as a creditor service for both individuals and companies

A credit line can be used as a creditor service for both individuals and companies

Depending on who the particular creditor to whom you are applying for the credit line issues their credit line. For companies, a credit line is one of the most beneficial and best ways to get additional working capital. Often, companies do not have the means to buy goods or pay for all the services they need to perform, especially if the company is operating in a sector that is highly seasonal.

Then, by borrowing a credit line for months in which the company’s profits are falling, the credit line guarantees that the company can continue to operate and employ enough staff to comfortably serve all its customers, and when the company’s turnover grows again, the company can repay the full amount of this credit line, paying in advance only the minimum repayment amount.

However, the credit line is not only suitable for companies, but it will also be a great solution for any individual who does not like to borrow conventional types of credit, such as popular fast loans or consumer loans, and wants to try something new. If, for example, at a particular time, a person’s salary is falling, or, for example, every month for a period of 4 months, a person lacks money for a comfortable life, then a credit line is the perfect way to increase your budget and ensure you have enough money means. And a credit line can also be the perfect solution for any unexpected situation where you need to get some extra cash in the short term.

Whether it is a car repair, a hospital bill or an unexpected trip, a credit line will ensure that you have enough money to make those payments, and once you are back on your feet and back to work routine, you can start slowly repay the amount you borrowed. In my opinion, one of the biggest advantages of a credit line is that the customer can control how much and if at all he / she wants to use the money taken out on the credit, within the period of time for which he / she has borrowed the credit line.

When borrowing a regular loan

When borrowing a regular loan

The creditor gives the customer money and, whether or not the customer spends that amount, he has to repay it with interest calculated on the full amount of the loan. However, a credit line ensures that you also have the option of not using the amount borrowed as a result of the credit line, which means that if you do not use that money, you do not have to repay it either, because after all. Most often, credit lines are offered by both bank and non-bank lenders in amounts ranging from a few hundred to several thousand euros and in terms of only one month to several years , which ensures that the client can vary both the amount he wants to borrow and the term. it wants to use a credit line. And, as I said before, since the interest is only calculated on the amount spent, the annual interest rates on the credit line are also often significantly lower.

Although a credit line, like a regular credit, needs to be pre-applied, the purpose of this application is to determine the amount of credit available and the length of time that the credit line will be available to the customer so that the customer issuing the credit line is for how long and for what amount the credit line is issued. Once a credit line has been obtained, the customer will have access to it at any time, 24 hours a day, 7 days a week, as well as on holidays, unlike credit that is often unavailable on weekends or on holidays.

Currently, everyone is able to borrow a credit line from a number of bank lenders and a number of non-bank lenders. Among the banks issuing credit lines but among the non-bank creditors already a large part of non-bank lenders registered and operating in Latvia offer their clients credit line hangover.