Credit line

A line of credit is a financial product aimed at companies, freelancers and also individuals seeking long-term financing . Know lines of credit available online. Read on to find out how it works and how this financial product differs from traditional loans or quick loans.

Online credit lines offer

Last update: 4 November 2020
Ranking created based on the most frequently granted loans
6 - 60 months
term
$ 500 - $ 10,000
maximum first loan
Yes
Supports Credit Checker
" APPLY FOR "
5 - 30 days
term
$ 100 - $ 1,000
maximum first loan
Yes
Supports Credit Checker
" APPLY FOR "
2 - 36 months
term
$ 100 - $ 5,000
maximum first loan
No
Supports Credit Checker
" APPLY FOR "
61 - 120 days
term
$ 100 - $ 400
maximum first loan
Yes
Supports Credit Checker
" APPLY FOR "
1 - 30 days
term
$ 50 - $ 300
maximum first loan
No
Supports Credit Checker
" APPLY FOR "
3 - 24 months
term
$ 1,000 - $ 5,000
maximum first loan
Yes
Supports Credit Checker
" APPLY FOR "
6 - 96 months
term
$ 1,000 - $ 50,000
maximum first loan
No
Supports Credit Checker
" APPLY FOR "
1 - 30 days
term
$ 50 - $ 750
maximum first loan
No
Supports Credit Checker
" APPLY FOR "
4 months
? Weekly or monthly payment
term
$ 100 - $ 500
maximum first loan
No
Supports Credit Checker
" APPLY FOR "

What is a line of credit

It is a type of bank or financial loan from which we can partially or totally withdraw an amount previously stipulated with the bank. They are very common among entrepreneurs and freelancers because they allow having a pre-assigned amount and the professional makes use of it when he needs it, for example, to renew computer equipment or to face a new hire.

In other words, it is a financial cushion that allows you to face an investment progressively.

It is also considered one of the smartest loan options, both for its system and for the interests, much lower than credit cards or revolving .

Before seeing in detail how a line of credit that is usually requested works, we must specify what its objective is. In other words, it is not usual to grant lines of credit for the sake of it, in the same way that their use is limited in time.

How does it work?

Suppose we need € 10,000 to use over the course of a year . During that time we can use part or all of it as follows:

  • First month: € 300 - € 9,700 left
  • Second month: 2,700 - € 6,000 left
  • Third month: € 2,000 - € 4,000 left
  • Fourth month: we give back € 1000 - € 5000 left

This theoretical example allows us to see that we can use the money available as we are, but always with the obligation to return that money in larger parts than a normal loan. By returning the money more quickly, the interest does not accumulate and it is cheaper. In fact, the interest is paid based on the days or months in which you have the money and you can also include a small part of interest for the money that you do not use.

Once the first temporary term of the line has finished, suppose that the one in our example has been one year, we can request a renewal . In this case, it would be extended for one more year, although the bank may suspend it if we do not return the money within the stipulated terms.

To whom?

Credit lines are financial products aimed especially at the self-employed and small companies that, due to their level of turnover, cannot cope with a large outlay.

An example of this professional use can be found in a situation in which sales have dropped momentarily and there is not enough money in the box to meet payroll.

Then the financial institution puts at your disposal an amount of money that would allow you to cover that expense and return it as soon as there is enough liquid in the box again. It would also serve so that a self-employed person can face the payment of taxes or payroll if, due to exceptional circumstances, the invoicing has been reduced or the collection has been delayed.

Can an individual request a line of credit?

Banks do not consider individuals as candidates for applying for lines of credit to make purchases, since there are other more interesting formulas for both parties: revolving cards, personal loans or installment financing .

Still, there are financial entities that offer lines of credit . Lines with mortgage guarantee are also granted to, for example, carry out the reform of a home with the same system with which a company's line of credit would be carried out.

In case you need a line of more modest amounts and focused on covering the small contingencies of the day to day, there are entities dedicated to fast online loans that not only offer personal loans without paperwork, but also offer small credit lines for individuals. These are formulas in which we do not receive 100% of the money requested, but we can withdraw it partially or totally, having to return only the part that we have withdrawn.

Types of credit lines

There are 3 types: two general and one particular

  • Secured line of credit : This type is backed by property valuable enough to cover the potential risk of default. This property can be a car, a savings plan, a real estate property or any asset capable of serving as collateral. Its main advantage is that the commissions and fees are lower.
  • Unsecured line of credit : this type of line is not backed by any collateral or any property of value, which makes it more complex to request and has higher interest rates as a result of risk.
  • There is also a form of personal credit line that is usually linked to real estate. These lines of credit are very specific and are usually aimed at the renovation of homes that require a large investment in a fairly long period of time. Although we could use the formula of a traditional credit, a line allows us both a flexible payment and lower interest payments.

We must not confuse the latter type with some types of personal loans. Although they may seem similar products, there are fast loan entities that allow us to make partial withdrawals of a specific amount.

Differences between loans and lines of credit online

credit line information

If you do not have great knowledge about financial products that an entity or a bank makes available to the client, you may not fully understand the difference between a line of credit and a traditional loan.

Both products are a loan, but the way in which it is loaned and how the amount is repaid is different. In a 'loan' to use, the financial institution makes the entire amount requested available to you and you will return the entire amount plus the interest (APR and TIN) that apply.

In a line of credit we partially withdraw the money whenever we need and we will return the part that we have used with the interest. The interest on a line is for the days you have the money and a lower interest can be added to the part that you have not used.

The line of credit can be renewed several times to reach its completion, while the traditional loan must be repaid within the established period and cannot be accumulated or extended automatically.

Another difference is that the interests of a line of credit are lower than those of loans and that this product is intended especially for companies and the self-employed, while the loans are designed for individuals.

How to request it?

The most important thing when applying for a line of credit is our history and creditworthiness. If we have applied for loans before and have had problems paying them back or we have a high level of debt, it may be more difficult for us to access any financial product.

The steps you must follow are:

  1. Confirm all the requirements :
    • Be at least 18 years old
    • Have a valid identity document (DNI, passport or NIE)
    • Have a checking account in United States
    • Have access to online banking
    • Have a fixed income
    • Have a mobile and email
  2. Enter the page of the financial institution
  3. Specify what total quantity you will need
  4. Wait for the answer
  5. When they confirm your line, make the first withdrawal

Where to contract a line of credit?

These are the entities in which you can request it completely online:

  • Milinea
  • MyKredit
  • Euroloan
  • Credit
  • Ferratum
  • Kviku
  • Credit Yes

FAQ

What is a line of credit?

It is a type of loan in which we withdraw only the amount we need at that time.

Can an individual access a line?

Yes, of course, there are personal fast credit institutions that provide loans in the style of lines of credit.

Can I request a line of credit with Credit Checker?

As with loans, being part of a delinquent file can make it difficult, but not prevent, contracting a financial product. You can use a loan broker or consult the options of entities that grant loans with Credit Checker and RAI.

Is it a good financial product ?

It depends. The line of credit is recommended for companies and the self-employed, while for individuals it is recommended to request a consumer loan. In any case, it is advisable not to borrow excessively and think very well the amount we need.

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