A credit line is a type of revolving loan, usually granted by the bank as part of its current account. A revolving loan from an ordinary overdraft differs primarily in the higher limit that is set with the client when concluding the contract and the larger number of formalities needed to grant this type of loan.
A convenient form of using additional funds
The credit line is a very convenient form of using additional funds. There is no need to apply for a loan every time it is needed and the amount borrowed can be used for any purpose. Once granted funds can be used repeatedly, and the debt along with interest automatically decreases or disappears with each payment of funds to the account.
In addition to banks, non-bank financial institutions and private loan companies also offer a convenient revolving loan. Since non-bank institutions cannot run individual savings and settlement accounts, the agreed amount to be used is sent to the bank account provided by the customer. The contract for a credit line usually covers no more than four months, and at the end of the loan period the entire amount including interest should be repaid.
Obtaining a non-bank credit line
Obtaining a non-bank credit line is easier than obtaining a revolving loan from a bank. It also involves fewer formalities. A non-bank credit line is a convenient solution for people with no fixed income – working on a commission contract or a specific work contract, as well as those who earn income from various sources, such as benefits, scholarships or seasonal rentals. The non-bank credit line can also be used by young people who are on the record and often have problems with their creditworthiness, so their loan applications are usually rejected by the bank.
Non-bank credit line – disadvantages
The non-bank credit line also has its drawbacks. It is primarily a fairly high interest rate and short duration of the contract, after which the entire debt, including interest, should be repaid. The easy availability of a non-bank credit line can also be a temptation for people who are imprudent in their finances and who can easily fall into the debt loop through irresponsible decisions. Therefore, a non-bank credit line should be used with caution and based on a realistic estimate of the timely repayment options, and in the event of any problems contact a professional advisor as soon as possible to help you find the best way out of your troubles.
In a dangerous debt situation, an experienced advisor will help you find the right consolidation loan, thanks to which instead of high installments from several credit lines we will pay only one lower installment per month.