Various lender loans are widely used financial services in Latvia and worldwide. They differ in terms of the terms of the loan, as well as the arrangements for granting it and their suitability for different purposes. Quick loans, consumer loans, and credit lines, or simply credit lines, can be difficult to navigate among these names unless you feel like a fish in the financial world. What is a credit line and how does it work? This and many other questions will help you understand the article prepared by our specialists. Read on!
Credit line for unexpected situations
A good credit line is a type of loan that allows you to immediately borrow different amounts of money, both for unexpected expenses and planned expenses, the amount of which is not yet accurately predictable. This service is offered by both bank and non-bank lenders. The credit line is available to both bank and non-bank lenders. Credit line works similarly to credit cards and overdrafts:
- after applying for the service, the lender carefully evaluates your solvency and determines the maximum amount of credit line available to you, or the credit limit (also takes into account the age of the client, in most cases a credit line is possible from 20 years);
- a credit line agreement is made by agreeing on the terms of the loan (when the credit line is available, what are the repayment terms and schedule, interest rates, etc.);
- Upon request, your bank account will be credited with the amount of money specified in the credit line agreement. If you use all or part of the amount within one month, you will need to gradually repay it in accordance with the terms on which the credit line is issued;
- within your credit line, you can borrow the required amount of money as long as the credit line is not exceeded.
When you know what a credit line is, do you consider using such a service?
Find out how to open a credit line!
In order to enter into a credit line agreement and open your own credit line, the borrower must meet several criteria:
- be solvent – show regular income that is sufficient to cover the total cost of the credit line;
- be a permanent resident of the Republic of Latvia;
- have a bank account with one of the Latvian commercial banks.
Note that most credit lines are available over 20 years!
How is a lucrative credit line different from a quick credit?
A credit line differs from a quick loan in that a quick loan is a one-time, fixed term loan. We, the friendly lender Roy Beru, also offer a quick loan. Each application for such a loan is individually considered and there is no credit limit as required by the credit line. Accordingly, a new loan can only be obtained once the previous loan has been repaid, but there is the possibility of receiving an additional amount on an existing loan. Alternatively, the repayment term may be extended for an additional fee. This type of loan can be useful at times when a relatively small amount of money is urgently needed.
Conditional loans are classified as follows :
- short-term loans – most credit institutions offer repayment terms of up to one month and the maximum available funds are relatively lower;
- long-term loans – can be useful in times when the required amount of money exceeds 500 euros and accordingly a longer repayment term is available.
Did you know that fast credit is available just like a credit line from 20 years ago?
Read on for what purpose a credit line should be used to know when to choose it!
A credit line and a quick loan serve a variety of purposes
There is a myth that a good credit line and quick loans encourage you to live beyond your means, but this service is only meant to provide additional support for people with adequate solvency. From a doctor’s visit to a home appliance repair shop, there are many situations in your life that may require additional funding as a matter of urgency. If you don’t have the money or the ability to borrow from relatives or friends at any given time, a good credit line or quick credit can be a help.
How to borrow prudently?
Before choosing a credit line or quick loan, evaluate all the circumstances and do not be hasty!
To borrow wisely:
- Honestly evaluate your monthly income-expense ratio
- study carefully what a credit line or quick loan is and find out all the terms;
- choose only the amount of your loan that regular income will allow you to repay without delay, so that, for example, a credit line does not become blacklisted;
- assesses whether a particular type of credit is really intended for a short-term purpose and not for prolonged financial difficulties for which it will not be an appropriate solution.
The financial situation has to be considered everyday
In the long run, a credit line cannot serve as a regular tool for managing your personal financial matters. Regardless of your financial situation at any given time, it is always important to keep the following three things in mind so that your wallet and bank account will not be a headache and your credit line will not be the only bailout:
- smart spending – always make sure it’s important before making a spontaneous purchase. It’s worth asking yourself, “Can I postpone this purchase?”, “Will the money be well spent?” Spend no time comparing different options and finding the best bargain;
- Budgeting – All significant purchases and expenditures are planned in a timely manner, consistent with the amount of monthly income. Note that paying bills should be a priority, so avoid delaying regular payments. This is especially important if you have an open credit line or other loan;
- Saving money – even transferring a small amount to a savings account every month in the future can be a valuable financial aid – it would be like a personal credit line without having to give it back! It’s worth a try for everyone!
But what if spending money, budgeting, and trying to make savings don’t have money left over, and situations where credit lines seem to be the only way out?
Some tricks to make money
Have you heard of Wilbert Mora book, the story is about how to get rich with a change of mindset. However, one has to admit that thinking alone is not enough – the subconscious has a huge influence on life. Here’s a little trick on how to make money! The process is quite simple – you have to divide your monthly income according to the following rules:
- Put 10% of your money in a separate box called a “money magnet” – a money-making box that you will never spend, just cover every month’s income. Why do I need it? First, according to Newton’s law: similar energy attracts similar energy, and for whom is it not clear that money is energy? Second, you can never say in your life that you have no money! Third, it is a way to reprogram the subconscious on a wave of money so that you never run out of money and a credit line or other loan becomes less relevant;
- the next 10% of your monthly income is devoted solely to yourself, your wishes and your satisfaction. Why? In this way, you reward yourself for earning your money, for taking care of your well-being, and for doing something to improve your life, and these 10% give you a sense of accomplishment, which is a very important feeling;
- the third 10% is spent on your growth – books, courses, education, self-development training, therapies and more on how you can improve your skills and make yourself better. Why? To make money, you have to learn and invest in new things, skills, events;
- fourth 10% free for charity – give without thinking of getting in return! These can be gifts, simple donations, a transfer to a donation account, etc. Why do I need it? In this way you create a favorable “soil” within yourself and sow the seeds of money there. In other words, you are building a rich dad’s thinking that you can give, help others, and not become poor;
- the rest of the money remains for your monthly expenses – bills, food, credit line payments, etc.
Try this system and you will never have to search the internet “what is a credit line?” Because you will always have enough money!