Even with the best-planned budgets, financial glitches may occur. A line of credit can provide the necessary financial support to meet unexpected expenses. If you're considering taking a loan in India, a credit line may be a better option
What is a Line of Credit?
A line of credit is a credit or borrowing limit that is approved on your account for a particular period. You can withdraw money out of this limit as needed, anytime until the tenure is over. Once you withdraw the money then the interest is accrued only on the used portion of the credit limit. Being a flexible credit tool, it is a convenient option for salaried individuals looking for online credit options. You can use it for your personal, business or household requirements.
A line of credit is of two types;
- Personal Line of Credit
- Business Line of Credit
Both types of credit lines can be secured or unsecured. You can get an unsecured credit line just based on your income and credit score. for a secured one, collateral is required.
When a credit line loan is availed in the name of a business, it's called a business line of credit. Whereas when an individual borrows a credit line, it's called a personal line of credit. You can use it for all your financial requirements.
Features of a Personal Line of Credit
Continuous credit support:
since a credit line is a credit limit that you can keep using and renewing hence it works as continuous credit support. When you have variable financial requirements it works the best.
while it is good for variable monetary requirements it is also good for every need. This is not a purpose-specific credit support it works as a one-stop solution for every need. Whether it is educational or medical or even for shopping it works well.
Secured and Unsecured:
A credit line can be both secured and unsecured. While you need a sum that is approved based on your salary slip and Credit history you can easily go for an unsecured one. But if you need higher credit support you can go for a secure credit line as well.
You can keep paying off your dues in variable instalments using a line of credit loan. Since the dues are accrued only after spending, you are liable to repay them only. So as you keep on using and keep on paying off your dues. It saves you from debt accumulation along with helping in easy repayment.
The interest is applied only when you use your credit. No interest is accrued on the ideal credit limit. Hence it becomes a pocket-friendly credit facility for you.
How does a Line of Credit Work?
It works as a revolving personal loan and has the following three components-
It's the total credit limit approved on your account. Out of it, you can keep withdrawing the money. Once you use the credit limit, interest starts accruing. No interest is calculated on the ideal portion of the credit limit.
It's the time period for which the credit limit remains active. You can withdraw the sum within which you can spend the sum for your needs.
It's the time when the draw period ends on a personal line of credit. Once the payoff time starts you have to start the repayment of your dues. Mostly the lenders provide the same draw and repayment period. While you can spend and also keep repaying in chunks.
How a Line of Credit is Different from a Credit Card?
|Line of Credit||Credit Card|
|A line of credit is a type of loan that allows you to borrow money as needed, up to a certain limit. You only pay interest on the money you actually borrow, and you can borrow and repay the money multiple times within the credit limit.||A credit card is a type of loan that allows you to borrow money for purchases and bills, up to a certain limit. You pay interest on the unpaid balance on your credit card each month.|
|The interest rates may be lower compared to a credit card, especially if you have good credit.||Credit cards often have higher interest rates because they are considered to be a higher risk for lenders.|
|You can apply for a specific credit limit and may sometimes require collateral.||With a credit card, you typically receive a credit limit based on your credit score and financial histo|
|It has more flexible repayment terms compared to a credit card. You may be able to make minimum payments or choose a repayment plan that suits your needs||A credit card, on the other hand, generally requires you to make a minimum payment each month, which is usually a percentage of your total balance.|
Requirements to Apply for a Line of Credit
It works as a revolving personal loan and has the following three components-
Your income forms the base for eligibility criteria for applying for a credit line. It ensures the lender that you have a stable and regular source of income. Hence you can borrow the credit and pay it back as well.
Your credit history is the mirror image of your past loans and their repayments. It tells the lender if you are new to credit or have taken a loan in the past. How have you been handling your loans? How many loans were there? Was there a default in repayment? All these answers are attained with your credit history.
Debt-to-income ratio is the factor between your income and financial liabilities. It tells if you can bear another loan or not provide with your current financial obligations. Based on this the lender can assess the quantum, tenure and interest rate to be given on your credit line loan.
How to Apply?
Visit the online platform of the lender: You can go on the official website or use the mobile app of your chosen provider. Now fill in the application form. At FlexSalary you can complete it with your name, contact and PAN details along with the amount required and the term of the loan.
Step 2: Upload all the required documents: Once the application form is filled out you go to the next stage of documentation. You can check the documents required online beforehand to save time. After documentation, the next stage is- verification.
Step 3: Complete the verification process: Now the creditworthiness of all your documents is observed. While you are taking an online credit line it's also done through e-KYC via a video call. At FlexSalary as well no physical verification is done.
What are the Documents Required?
The required documents can vary from lender to lender but remain within the following records-
- Identity Proof: Any photo identity proof authorised by the Government of India (PAN/Aadhar/Passport/Driving license/Army IDs)
- Address Proof: Any document that tells the lender your residential address which is also used for correspondence. (Aadhar card/ utility bills/ rent agreement)
- Income Proof: Income statements which tell about your nature and statement of employment. They also give figures for your income. (Salary slip/Bank statement/ P&L account/ Income from various sources)
Eligibility Criteria to Apply for a Credit line
Eligibility criteria might vary with lenders. Some give the credit help to salaried professionals while others to self-employed. In these two sections as well there are sub-criteria based on minimum income, required sum, tenure of the loan etc. But while you are taking a personal line of credit a few factors, discussed below, are mandatory at every lender-
- You must be an individual of 18 years or more
- You must be an Indian
- You must have a permanent and steady income
Many banks, NBFCs and private lenders are providing a line of credit online. Based on your financial requirement and repayment capacity you can choose one and apply for it. Amongst many providers, FlexSalary is one search provider of an online line of credit. If you are a salaried employee you can choose it as an alternative to your instant loan. Let's know its benefits in detail-
Benefits of FlexSalary Line of Credit For Salaried Professionals
Credit on Salary and no collateral: FlexSalary offers an unsecured personal line of credit. Without any collateral, you can avail it just based on your salary slips and bank statement. Also, no hard credit check is done at FlexSalary for approval so don't worry if your CIBIL score is not so high.
Lifetime credit with one-time approval: It can be a perfect alternative to an instant personal loan online for many reasons. One is- Easy renewal. You can revise your credit limit after repayment of your dues with just one click. No application process from scratch is required.
Flexible repayment options: For repayment, no fixed EMI is mandatory at FlexSalary. You can easily pay off your dues in variable instalments as suitable to you. Since it's a credit line for salaried professionals, flexible repayment is easy to manage within a fixed monthly salary. No additional charges or penalties are applied as long as you are making the minimum monthly dues.
No excess interest applied: At FlexSalary, you can pay the interest comparatively lesser than a personal loan. But also the rate of interest is competitive and reasonable. Based on your credit score you can negotiate for a better deal on loan here. At FelxSalary only one-time processing fees are applied not every time you withdraw money.
Flexible repayment tenure: At FlexSalary a flexible repayment tenure of 3-36 months is provided. During this period you can repay your dues anytime. Until you pay off all your dues minimum monthly repayment is so far so good and no penalty will be imposed. Also, no prepayment charges are imposed against the loss of interest in case of partial or full prepayment.
What is the Credit Limit Available at FlexSalary?
At FlexSalary you can Get an Instant Personal Line of Credit Up To Rs.2L starting from Rs.500. Also it has relaxed eligibility criteria where anyone with a salary of Rs.8000/m is eligible to apply. With a large credit limit, it becomes perfect for both your small and bigger expenses. It can be used for all purposes; medical, education, travel, shopping, bills or any other financial need. It applies no restriction on the nature or type of expenditure, unlike a few personal loans. For example an education loan that you can use specifically for tuition fees.
Choosing an instant credit limit might provide you with fast assistance when you face a financial emergency. Being revolving in nature it works as a continuous credit support. Since it is not a purposes-specific credit tool you can use it for all your financial needs. Many lenders are available online and based on your financial requirements and repayment capacity you can choose one. If you are a salaried professional FlexSalary instant loan app can make a good choice for you.