Stellar Snippets
A line of credit (LOC) is a preset borrowing limit that you can draw on at any time when the line of credit is open.
The main advantage is flexibility. You can borrow only what you need and avoid paying interest on a large loan.
Unlike a loan, a line of credit allows you to draw funds when needed, rather than taking out one lump sum.
This is especially true with lines of credit that are powered online, which provide quick access to cash, almost instantly.
An LOC can be used for any purpose, from overcoming cash flow gaps to paying for large expenses like medical bills.
LOC funds can be used any way you wish, unlike a traditional bank loan that must be used for a specific purpose.
However, be aware of potential problems. Unsecured LOCs tend to have high interest rates and credit requirements.
Potential downsides include high interest rates, penalties for late payments, and the potential to overspend.
Make sure you can afford to make repayments and avoid getting into more debt than what you can manage.