Line of Credit
A line of credit loan is a form of revolving credit and comes with limits. It is an account that you can open with a bank, a credit union, or a non-banking financial company. You can be approved for a preset amount by the lender and you can withdraw cash whenever you need it, as long as you stay within your approved credit limit. A line of credit loan can be an unsecured loan and you are not required to use any assets, like your car title, as security to get approved for a loan.
A line of credit gives you the flexibility to borrow money, repay some of it, and then borrow again. It works just like a credit card and the interest doesn’t begin until you use the money. After you use some of the funds, interest will be charged until you repay those funds. Once you repay, your credit line is renewed.