Most people are familiar with the way a traditional bank loan works. You receive a certain amount of money from a bank or financial institution, with an agreement that you will make monthly payments and pay interest on the loan amount until it has been repaid in full. A personal line of credit, on the other hand, may be a new concept for some people.
How is a Personal Credit Line Different from a Personal Loan?
A personal line of credit is similar to a loan in some ways, but in other ways it works more like a credit card. The same way as with credit cards, interest is charged only on the amount used, not the entire approved limit. However, you can choose the repayment schedule and term with flexible EMIs rather than having to pay a minimum amount every month.
Also, every repayment you make towards a credit line recharges the amount of credit available for the next use. This feature of recharging credit limits is what sets MoneyTap (download their salary advance loan app) and other revolving lines of credit apart from traditional loan options.
How Does the Recharging Credit Feature Work?
With a traditional loan, you are handed a lump sum after approval and this needs to be repaid within a fixed time period. Even after a loan is paid in full, you cannot use it again. Unlike personal loan repayments, you can borrow against your available limit in a credit line as many times as needed and keep making repayments to recharge your credit.
Here’s how the revolving credit feature makes MoneyTap better than bank loans or credit cards:
- With flexible EMIs, the app let’s you choose the repayment term most convenient for you, which can be anywhere from 2 months up to 3 years.
- In addition to being more convenient and affordable than loans, a credit line allows you to withdraw cash at lower interest rates than credit cards.
- You have a source of funds available through your smartphone 24/7, and you can borrow as little as ₹3,000 all the way up to your maximum limit.
- Every repayment adds to your available credit, and you can use the included credit card or opt for cash and repay the used amount as often as you like.
- With an app-based credit line, repayments can be made through various modes, to instantly refresh the available credit anytime and anywhere.
- 24/7 tracking and monitoring through the MoneyTap app allows you to see how much credit is still available to use and choose a repayment amount accordingly.
- You can pay more when you have extra funds or even repay the full amount, without worrying about fees and penalties for early closure and prepayment.
- You enjoy greater flexibility and control, since you are not restricted to a fixed number of EMI payments, minimum monthly dues, or instalments chosen by a lender.
- As long as you haven’t reached the maximum credit limit for which you were approved, you can use the revolving credit as often and as many times as you like.
- With the app on your smartphone, you can be sure of having a financial backup for any emergency or any unexpected expenses that may show up further on down the line.
As you pay off your debt in a revolving credit line such as MoneyTap, the amount available to use gets continuously refreshed. This way, you always have funds when needed, but you will only start paying interest when you actually use the credit provided to you. And after you have been approved, you will have access to instant loans for life!