Sunday , February 25 2018
Most Recent Posts
Home / Powerful Inspiring Stories / Personal Line of Credit: From Basics to Benefits

Personal Line of Credit: From Basics to Benefits

Even in a fluctuating financial market, you can always find a way to avail credit and access funds. The catch lies in choosing the right lender or financial product. If you are looking for a relatively flexible option with a lower interest rate, consider a personal line of credit.

What is a Personal Line of Credit?

A personal line of credit allows the borrower to use only the money he/she needs. Its variable rate of interest is typically lower than the interest rates on fixed loans.

While the lender approves your entire loan amount at once, the borrower only pays interest on the amount transferred for use. A personal line of credit lets you maintain a maximum loan balance account and gives you instant access to funds. This is a continuous revolving credit account and includes a maximum borrowing limit.

The credit limit will depend on the CIBIL score, which reflects the borrower’s creditworthiness. It’s based on his income and credit history. As the borrower repays a part of the amount, the interest is then charged on the remaining balance, which keeps reducing every month.

Personal Loan vs. Personal Line of Credit

personal line of credit loan

A personal loan provides the borrower access to a fixed amount of cash for a predefined period where the repayment timeline remains fixed and pre-payment attracts an additional fee.

A personal line of credit, on the other hand, is available for use at any time. Its interest is not charged on the entire amount allocated to you. In a personal loan, the lump sum amount is disbursed to the borrower for one-time use and the interest is charged on the entire amount, regardless of the amount used.

Another major difference between a loan and a line of credit is the rate of interest.

The interest rate of a personal line of credit is generally higher than a personal loan. Yet, if you compare the closing costs of both, a personal line of credit would prove to be an affordable option. A personal line of credit is flexible, open-ended, and can be used for any purpose.

Interest Rates and Processing Fees

Banks and non-banking financial businesses are now offering financial products with the benefits of a personal credit line.

The generic charges and fees of such funds typically include:

Activation Fees – This is a one-time joining fee that lending institutions charge at the time of approving a personal line of credit or on withdrawal of funds.

Interest Rates – A line of credit has a variable rate of interest that depends on the borrowers’ CIBIL score and typically ranges between 16-25% annually.

Processing Fees – The lender may charge an annual maintenance fee of 1 to 2% of the approved amount. Certain lenders don’t charge an annual fee, but they do charge a processing fee every time the borrower withdraws money.

Applicable Taxes – Government taxes are levied on a personal line of credit wherever applicable and they include the interest rate.

Who Should Leverage a Line of Credit and When

Having a line of credit helps when you don’t need a fixed amount. It’s also useful when your monetary needs are spread over a timeline of a few months. It proves beneficial in case of medical emergencies, home improvement, vacation or a family wedding where you can never be certain of the amount you would need.

Both self-employed individuals and professionals who do not have a fixed income can benefit greatly with a line of credit. Borrowers can instantly access cash through the ATM, mobile banking or checkbook and get the needed amount any time, anywhere.

atm machine

The Benefits of Using a Personal Line of Credit

Fast and Flexible– Borrowers can tap into funds as and when the need arises with a personal line of credit. While they have access to a large credit amount, they also have the freedom to use only what they need and pay interest on that amount only. Also, the repayment terms are relatively flexible for both part and lump sum payments.

Affordable– Since borrowers don’t need to pay interest on the entire amount that is disbursed, the cost is reduced significantly if the funds aren’t utilized completely.

No Charges on Withdrawal– Generally, there are no charges for withdrawing money.

Higher Limits– A personal line of credit usually comes with a higher limit as compared to personal loans and credit cards. This makes it a perfect solution for funding large expenses.

No Collateral Required– A personal line of credit needs no collateral backing. Even if you don’t have any financial reserve, you can make use of a line of credit.

The Limitations

Fluctuating Interest Rates– Being an unsecured product, the interest rates of a personal credit line keep fluctuating as bank interest rates go up and down. Borrowers may end up paying much more than what they had expected.

Revolving Account– This means that borrowers need to keep track of the amount due.

Stringent Approval– A personal line of credit is approved on the basis of the borrower’s CIBIL score. Those with a poor credit history may not be able to take advantage of it.

Maintenance Cost– Some banks and NBFCs levy closing costs or maintenance charges on a personal line of credit.

No Tax Deductions– The interest charged on a personal line of credit is not tax-deductible. A line of credit is a flexible instrument fulfilling the dreams of many professionals today. So, if you are planning to make the most of this financial product, make sure you are well-informed with the right knowledge.

The post Personal Line of Credit: From Basics to Benefits appeared first on Dumb Little Man.

Click Here For Original Source Of The Article

Ads by WOW Trk

About Darren Webb

Hello & Welcome to my blog. My name is Darren Webb and i'm on a magical successful journey and also helping others have a more stress free relaxed life. I truly hope that you find a lot of useful information on my blog and that it helps you through your life. Please feel free to contact me at any time.

Check Also

Final Round of WDS 2018 Tickets On-Sale Now

WDS 2018

This is the last chance to get your ticket for an all-new adventure.

--> Join Us in Portland for WDS 2018!

Each year, 1,000+ people from 30+ different countries journey to beautiful Portland, Oregon for a summer gathering known as the World Domination Summit (WDS).

Give Your Child That Dose of Self-Esteem

It is often said that the mountains move aside for the man who knows where he is going. This oft quoted maxim proves the value of determination and self- confidence because determination is a much needed value that oozes out of an individual only when he is has the self- esteem. Self- esteem is again...

Read More »

Scientific Studies Show How Nutrition Influences Our Creativity

You're reading Scientific Studies Show How Nutrition Influences Our Creativity, originally posted on Pick the Brain | Motivation and Self Improvement. If you're enjoying this, please visit our site for more inspirational articles.

 

It is widely known that eating a healthy diet benefits our physical health. But less is acknowledged about the psychological benefits. We have all tried exotic ingredients or foods that make us feel happy. But, how is our mood actually affected by what we eat? And, how can it end up influencing our creative thinking?

Pay attention to your body and your mind right now. Are you working at your maximum potential? Now recall what you had for lunch or breakfast and how it may be affecting your productivity. Now put this into perspective. Because this is something that is happening over an extended period of time and not instantly.

The role of glucose as our brain's fuel

The award-winning psychologist, Ron Friedman, explains in one of his articles for Harvard Business Review how "food has a direct impact on our cognitive performance, which is why a poor decision at lunch can derail an entire afternoon."

And this happens because "about everything we eat is converted by our body into glucose, which provides the energy our brains need to stay alert. When we’re running low on glucose, we have a tough time staying focused and our attention drifts. This explains why it’s hard to concentrate on an empty stomach".

The problem is that our body does not handle all foods at the same rate. Renée Leonard-Stainton, qualified Naturopath, Nutritionist, and Western Medical Herbalist, explains how our body processes glucose and how to eat for mental energy. "Eating foods with a low glycemic index (meaning that they release glucose more gradually into the bloodstream) may help you avoid the lag in energy that typically occurs after eating quickly-absorbed sugars or refined starches."

Turning fruits and vegetables into well-being

Research conducted by the University of Otago in New Zealand recruited 400 people aged between 17 and 25 years old, to try to define the association between fruit, veg and well-being. For 13 days, participants reported their consumption levels of fruit, vegetables, sweets, and chips, as well as their well-being, curiosity, and creativity. Researchers discovered a correlation between higher fruit and vegetable intake and higher average well-being, curiosity, and creativity levels among the participants. But what is more interesting, is that their fruit and vegetable consumption on one day, didn’t improve their well-being the following day. This therefore emphasizes the need to eat a healthy and well-balanced diet consistently.

Foods that boost creativity

The studies mentioned before, prove that foods that are rich in vitamins and minerals promote well-being, curiosity, and creativity. But what specific foods should we consume to improve our productivity and consequently our creative thinking?

Vitamin C is an essential factor in the production of dopamine, the neurotransmitter that underlies motivation and promotes engagement. Foods with vitamin C are not only oranges but also strawberries, pineapple, mango, kiwis, papayas, brussel sprouts, bell peppers, and broccoli.

B vitamins influence feelings of vitality and engagement. You will find a source of vitamin B in tuna, Swiss and cottage cheese, shrimp, sardines, mussels, oysters, clams, salmon, crab, trout, herring, beef, chicken, turkey, whole-grain oats, and milk.

Antioxidants such as vitamins E help reduce bodily inflammation, improve memory, enhance mood, and may help prevent depression. Ingredients with vitamins E include almonds, spinach, sweet potato, avocado, wheat germ, sunflower seeds, butternut squash and olive oil, among others.

Finally, spices are such an important part of our daily diet. Cinnamon, for instance, makes your neurons stronger for a longer period of time. Research from the University of California at Santa Barbara shows that a sprinkle of cinnamon in your meal can help blood flow and stabilize proteins in the brain, improving blood glucose.

In conclusion, our creative thinking is affected by a number of external elements, but the food we eat is such an important part of it. Choosing a diet with ingredients that are gradually processed by our body are crucial to staying productive. At the same time, our diet will also affect mental energy and positivity, and the combination of these factors will determine our levels of creativity.

 

You've read Scientific Studies Show How Nutrition Influences Our Creativity, originally posted on Pick the Brain | Motivation and Self Improvement. If you've enjoyed this, please visit our site for more inspirational articles.

Protecting Yourself From Fake Social Media Accounts

Fake news. You’ve probably been hearing a lot about it lately. What is fake news and why is it so important that you know how to spot it? Fake news is not someone saying something you don’t agree with. It’s not one political party pointing out facts that happen to be inconvenient to the opposition. […]

The post Protecting Yourself From Fake Social Media Accounts appeared first on Dumb Little Man.

I’d Like to Hear Your Stories About Failure

In many of the talks I’ve done, I’ve noticed that one topic comes up over and over: failure.

What’s your biggest failure?

Are you afraid to fail?

How are people able to recover from failure?

Even though I have a daily podcast that tells success stories, I believe we can also learn a lot from failure. And here's the thing: I don’t know if the learning objective is always to “bounce back.” Some failures may be, well, permanent.

In any case, I’d like to hear from you. Maybe your failure story will help someone else avoid a similar mishap, or maybe the act of naming it will help you move on.

Leave a Reply

css.php