Line of Credit: Pay Interest Only on What You Use, Not the Whole Sum
Line of Credit: Pay Interest Only on What You Use, Not the Whole Sum
- •Line of Credit charges interest only on the amount withdrawn, unlike personal loans where interest is on the entire sum.
- •A pre-approved limit (e.g., 5 lakh rupees) is available, but interest applies only if you use a portion (e.g., 1 lakh rupees).
- •Repaying the borrowed amount replenishes your available limit, eliminating the need for repeated loan applications.
- •Ideal for unpredictable expenses like home renovation or managing business cash flow delays.
- •Caution: Interest rates can be higher than secured loans; best for short-term financial buffer, not long-term debt.
