4 ways a line of credit could be key to your money needs

Ever considered a loan, but unsure how much you’ll need? A line of credit could be the key you're looking for to help solve all your money needs. Here are four ways how.

A line of credit is an arrangement between a financial institution and a customer, wherein they can borrow a large sum of money for a personal project or purchase. In using a line of credit, a client has the most flexibility to managing their money. They can have access to these funds at any time enabling them to take out whatever amount they need.

The client (borrower) can draw on the line of credit at any time as long as the total amount doesn’t exceed the limit set out in the agreement between the financial institution and the client. For example:

• An individual with a line of credit of $30,000 could make a few separate withdrawals of a few thousand dollars each to complete renovations on his home as long as the total amount doesn’t exceed the $30,000.

Companies also really benefit from this type of loan to help them with cash management. In many cases, a company’s line of credit limit is negotiated annually.

1. Flexibility: The client can withdraw whatever amount of money is required whenever it is needed. Another benefit is that the borrower can determine their monthly repayment amounts.
2. Interest: The financial institution providing the loan usually charges little or no interest on the amount that isn’t used by the customer. So in other words, the customer only pays interest on the money that has been withdrawn as opposed to the total amount of the loan.
3. Easy account management: The client can manage the account as easily as their current bank account. An online list of transactions can be viewed at any time, online money transfers can be done to enable funds to be withdrawn from an ATM or to transfer funds to pay the balance of a credit card.
4. Eligibility: Students are also eligible to get this type of financing. At some financial institutions, full-time students can qualify for an annual line of credit of up to $10,000.

Fortunately, if this is something that interests you, the application process for these types of loans is quite simple.

• Contact a financial professional from your banking institution to guide you through the application process. They can also advise you on the approximate amount you’ll need to borrow to complete your project.

Another option is to fill out an online application directly on your bank’s website by following the instructions. You may choose to print out the forms, fill out the documents, and mail them in to your financial institution. Credit line application forms are available online or at any bank.