credit line

CREDIT LINE
A credit line, also known as a line of credit, is a type of loan that allows borrowers to access funds up to a predetermined limit, typically over a period of time. Unlike a traditional loan, where the borrower receives a lump sum of money upfront and makes fixed payments over a set period of time, a credit line provides borrowers with more flexibility and control over how and when they access funds.
With a credit line, the borrower is given a maximum borrowing limit, but they only need to pay interest on the amount they actually borrow. The borrower can withdraw funds as needed, up to the credit limit, and can repay the borrowed funds at any time without penalty.
Credit lines are commonly used for business purposes, such as financing inventory purchases or covering cash flow gaps. They can also be used for personal purposes, such as home renovations or emergency expenses.
Credit lines can be secured or unsecured. Secured credit lines require collateral, such as a home or other asset, to guarantee the loan. Unsecured credit lines do not require collateral, but typically have higher interest rates and more stringent borrowing requirements.