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Line of Credit
What is a line of credit?
A line of credit is an unsecured and ready source of funds, which can be used for business as well as personal needs. You can withdraw from the line of credit account through bank transfer or cheques. Every borrower is allotted a credit limit for the term of the facility and can withdraw as many times as needed within that limit.
The amount withdrawn must be repaid with interest on the outstanding balance as per the lender’s terms and repayment schedule. During the term, you may also increase the limit based on usage and credit profile.
A line of credit can be used for home improvement, medical expenses, or funding a child’s education.
How to apply for a line of credit
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1
Check
Check eligibility on call
Tell us if you need a personal or business line, secured or unsecured, and a realistic credit limit.
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2
Submit
Share KYC and income proof
Identity, address and income documents are required. For a secured line, collateral papers are collected as well.
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3
Verify
We start verification
The lender reviews credit score and usage. After approval you can draw, repay and reuse funds within the limit.
Types of lines of credit (LOCs)
Lines of credit are generally categorised as secured or unsecured.
Secured line of credit
You get the facility against collateral. If you fail to repay, the lender can seize or liquidate your assets.
Unsecured line of credit
A revolving credit account. You need not pledge collateral. Approval is based on income and credit score. Because the risk is greater, the interest rate is usually higher. Depending on use, it may be a personal or business credit line.
Personal line of credit
Typically used for urgent expenses or longer needs — a sudden financial gap, a family function, or a large purchase.
Business line of credit
Used for ongoing business expenses such as working capital, wages, raw materials and inventory.