If you’re holding out on giving a much-needed makeover to your home appliances because of a budgeting problem – we’ve got a solution for you.
You can replace the rusty old refrigerator with a new one that keeps your ice cream cold and buy a brand-new microwave that chimes after it’s done heating your food with a personal line of credit.
What is a personal line of credit?
A personal line of credit is a loan that lets you borrow money up to a given limit till a given time (known as ‘the draw period’) from the lender.
How can you use a personal line of credit?
These open-ended loans let the borrower withdraw funds within a given limit for the draw period. These funds can be accessed at any time through a bank transfer or a line-of-credit check.
The interest begins accruing as soon as the funds are withdrawn. Still, the interest is only charged on the amount withdrawn, instead of receiving a personal loan on which a lump sum interest is charged on the whole amount.
The borrower can make a minimum monthly payment on the loan amount like one might do with credit cards. But since a personal line of credit loans don’t have collateral, the interest rate might be a bit higher. The borrower generally has to pay an annual or monthly maintenance fee to take this type of loan.
The borrower might also be charged a late fee if the borrower can’t pay the monthly amount due on time. To qualify for a higher personal line of credit, you need to have a good credit score.
Why should you opt for a personal line of credit?
The advantages of a personal line of credit are:
- A personal line of credit is available to you anytime and anywhere, thus giving you the power to purchase what you want when you want.
- You only need to pay interest on the amount of money you’ve borrowed from the given limit. This gives the borrower an advantage over a personal loan, where interest is charged on the whole amount that’s given to you upfront. Also, the interest rate levied on a personal line of credit is less than that levied on credit cards.
- Once the amount you’ve taken is paid back, you can borrow again immediately during ‘the draw period.’
- There’s no collateral required for the loan amount.
- Since the loan secured by a personal line of credit can be used for a wide variety of personal or household needs, it is a good way to pay off higher-interest debts, like a student loan or a personal loan.
- You have a flexible repayment option for a personal line of credit.
- Since you can get a personal loan of credit almost immediately, you can use it for your personal projects like buying home appliances when you are renovating your home or buying your first house.
How you can opt for a personal line of credit for home appliances
A personal line of credit can be used to buy more expensive home appliances, which you might not be able to buy in one go, like a refrigerator, home theatre or cooking range. Buying an expensive home appliance on a personal line of credit will help you build the home of your dreams in a short period, and while you can pay off the loan in easy EMIs with a low rate of interest.
Applying for a personal line of credit is really easy with these documents:
- Identity Proof
- Proof of Employment
- Proof of Residence
- Proof of Income
- Proof of Age
- Bank statements of the last six months
- Pan card and Aadhar card
MoneyTap offers a personal line of credit with an application process that is swift with competitive interest rates. Apply for a personal line of credit at MoneyTap now!
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at firstname.lastname@example.org