Loan Line: Keeping a Running Tab

2007-03-08 10:33:40

( Automobiles )



THE REVOLVING LOAN

Loan line or debt line refers to a revolving amount that you can draw from as the need for funds arises. It is like keeping a running tab on a bar or restaurant that you are a regular patron of. There is a line available to you if you should want to use it.

A loan line is commonly associated with a credit card or a home equity line of credit. But another type of loan that can work like a loan line is a payday loan. Basically they all work the same on the principle – based on your financial standing and payment history your bank or lending company will issue a set loan-able amount that you can borrow against time and again as long as you can make the specified payments.

Payday loans are watered down versions of credit cards and home equity loan lines. As a debt line, they are also slightly different. Once you have been approved for a payday loan, you can borrow again and again provided that you pay off the principal loan first. Of course payday loans provide substantially lower loan amounts compared to other debt lines.

ON GOOD STANDING

If you have good standing relationships with your lenders, they can even issue a loan line that is not attached to a credit card or home equity. This is especially true for businesses. Your company can apply for loan lines that you can use to fund your expansion and investment ventures.

An ordinary loan is a one time deal and you either get the entire amount or not. The main advantage of a loan line is that unlike an ordinary loan you can draw from it again and again provided that you make regular payments off the principal amount. A loan line is more flexible and renewable.


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