personal line of credit
Học thuậtThân thiện
Definition
- Noun:
- A personal line of credit is a pre-approved borrowing limit extended by a financial institution to an individual customer. It is a flexible loan that allows the customer to access funds up to a specified maximum amount, repay, and borrow again as needed, typically with interest charged only on the amount drawn.
Usage
- A personal line of credit functions like a revolving credit account. You can use it for various personal expenses, such as home renovations or consolidating higher-interest debt.
- Unlike a term loan, you do not receive a lump sum. Instead, you have ongoing access to funds up to your credit limit.
- Interest accrues only on the portion of the credit line you have actually used, not on the entire approved limit.
Examples
- Noun:
- She used her personal line of credit to cover unexpected medical bills.
- The bank approved him for a personal line of credit with a $15,000 limit.
- It's wise to have a personal line of credit for emergencies rather than relying on credit cards.
Advanced Usage
- "to draw on a personal line of credit": to access or withdraw funds from the available credit limit.
- We decided to draw on our personal line of credit to fund the wedding.
- "to secure a personal line of credit": to obtain approval for one, often implying it is backed by collateral.
- He secured a personal line of credit using his investment portfolio as collateral.
Variants and Related Words
- Line of credit (LOC): A more general term for any pre-approved credit facility, which can be personal, business, or home equity.
- Revolving credit: The category of credit that includes lines of credit and credit cards, where the credit replenishes as debts are paid.
- Credit limit: The maximum amount that can be borrowed under the line of credit.
Synonyms
- Revolving loan: Emphasizes the reusable nature of the credit.
- Credit facility: A broader financial term for an arrangement that supplies credit.
Related Phrases
- "Access your line of credit": To utilize the available funds.
- You can access your line of credit via checks, online transfers, or a card.
- "Pay down the line of credit": To reduce the outstanding balance.
- Their goal is to pay down the line of credit before the introductory rate expires.
Related Concepts
- Unsecured personal line of credit: A line of credit granted based on creditworthiness without requiring specific collateral.
- Secured personal line of credit: A line of credit backed by an asset, such as a savings account or home equity, often resulting in a lower interest rate.
Noun
- the maximum credit that a customer is allowed