LUMP SUM VS. LINE OF CREDIT
Unsecured loans offer the choice of receiving your funds as a revolving line of credit or as a lump sum. You'll need to analyze your needs and goals in determining which is going to be better for your situation. If you are not sure, please contact us and we can help you.
Line of Credit
The manner in which a line of credit operates is comparable to a credit card. Suppose you receive approval for a $5,000 loan with a term of three years. You are entitled to borrow any amount amount of the $5,000 at any point of the three years. As the funds are paid back, they are available for borrowing again. So, if you borrow $2,000 of the $5,000, there is still going to be an additional $3,000 at your disposal whenever you need it. In actuality, a $5,000 line of credit can equate to a much larger loan than a $5,000 lump sum. It is important to note that your total credit line is required to be paid back at the conclusion of your three year term.
Using a line of credit is a great choice if you
are looking for finance on-going scenarios like paying for college
or for making home improvements. You will receive a check book that
you can use for writing needed amounts for expenses and coupons for
making monthly payments.
Lump Sum Loans
Lump sum loans are typically deposited straight into your bank account. You will make monthly payments via a coupon book. These types of loans are best for financing one-offs like a wedding or vacation.
Pros and Cons of a Line of Credit - Determine if a line of
credit is right for your needs.