Line of CreditA line of credit is different than a loan. A line of credit is a loan that you are approved for, but you have not necessarily used. It is available for you to borrow with whenever you need it.
Many businesses choose to become approved for lines of credit, so that when they need money, they do not have to go through the hassle of applying for a loan, they can just borrow against their line of credit. Many individuals who know they may be facing income crunches in the future, or might want to start a business, will extend a line of credit with their bank, for the same reason. The line of credit usually receives a variable interest rate. This means that the interest rate might change before you need to borrow the money. When you borrow against a line of credit, you will pay back the loan like any other personal loan, with monthly payments.
More Glossary Terms Explained here
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