Comment obtenir une marge de créditSeptember 26, 2016

How to Get a Line of Credit

We've all had this kind of experience. One day, a friend or acquaintance tells you about a discount on a trip that you have dreamed of taking for years. You jump for joy. You can already see yourself sunbathing on a beach, skiing the slopes, or dining in a good restaurant, only to realize you do not have the money to go. Do you need to put aside your dream? Thankfully not! That is where a line of credit can help you finance your most expensive projects without having to worry about not having enough money to realize them. To understand how to take advantage of this financial instrument, take the time to see if a line of credit is right for you.

What Is a Line of Credit?

Quite simply, a line of credit is a type of loan allowing you to borrow money up to a set amount. You can withdraw or transfer money from your line of credit at any time by cheque, withdrawal from an ATM, or even on the Internet. As with a credit card, you must pay interest on the amount withdrawn from the line of credit from the moment that the withdrawal is made. A monthly statement will show your balance, including the minimum required payments, if any.

The Good (and Not So Good) Reasons to Use a Line of Credit

Although credit cards are often helpful to meet unexpected expenses or to finance a more ambitious project, lines of credit are advantageous in that they generally have lower interest rates, as well as more flexible reimbursement options. Therefore lines of credit are useful for eating out, taking vacations, personal purchases, or even paying for entertainment.

However, it is important to remember that a line of credit is not unlimited and must be used responsibly. While it may be tempting to indulge in a few splurges, a line of credit should not be allowed to become an extra burden.

Types of Lines of Credit

There are two main types of credit: secured and unsecured.

The main advantage of a secured line of credit is its low interest rate. However, the borrower will have to put up some property as collateral. In that way, if the borrower fails to honour his repayments, the creditor may seize the property placed as collateral. An unsecured line of credit allows you to borrow money at a higher interest rate, but without an object placed as collateral.

There are also home equity lines of credit (usually to finance major purchases related to property, such as renovations), personal lines of credit (often used to consolidate loans or deal with the unexpected), and margins of student credit (to supplement a student income, buy equipment, pay for courses, etc.).

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