Flexible, simple and easy to use, a line of credit is a great asset for both individuals and businesses looking to augment their existing cash reserves. But how to ensure you’re getting the most of it? The most important thing is closely analysing your needs, then being rigorous about choosing a loan product that aligns with those needs. In this blog, we’ll help you discern which type of line of credit is most suitable for you, and will provide some tips on how to make it as effective as possible. Read on to learn more.
Different products for different purposes
You wouldn’t simply go into a lender and ask for a ‘loan’ – they would ask you to be specific. The same goes for lines of credit. You need to understand the differences between the various kinds of loan products available – who they’re for, what they do, and how long you can use them for.
The most basic line of credit is the personal line of credit. Offered in both secured and unsecured forms, this is a strong alternative to a personal credit card as it delivers lower interest rates with about the same level of flexibility. Personal lines of credit can come in all sizes to meet needs both big and small, so talk to your lender to find the most suitable one for you.
One of the most commonly stressed about things is home repairs. If you’re concerned about having the money to pay for repairs and replacements as they come up around your property, a home equity line of credit (HELOC) could be for you. These are intended to only be used for home improvements – think repairs, emergency fixes and other projects. Most often secured against the property itself, HELOCs generally come with very low interest rates, making them an accessible option for home-owners.
Even businesses can enjoy the flexibility that a line of credit offers. Business lines of credit are most frequently taken out to meet short-term financial needs such as buying inventory, managing operating expenses or purchasing new equipment. Most often secured against inventory or equipment, they offer a ready supply of cash that can be easily dipped in to in order to help you achieve your goals.
Tailored to your needs
Make the right choice for your financial future and start a discussion with the loan consultants at Fast Money today, and let us help you make an informed decision.