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Over the years, financial advisors have been urging every working citizen to establish an emergency fund to offer some cushion on a rainy day. But saving money is not always easy even when there’s a constant flow of income. However, a line of credit loan can boost your savings plan significantly and at the same time give you a contingency plan that you can use to replace your savings.

Although most people view this loan in the same light as installment loans, there are distinct differences. If you want to give your savings plan a solid boost, Nation 21 helps you get the perfect line of credit loan to enhance your financial well-being.

What are lines of credit loans?

This is a predetermined amount of money that is offered to an individual or commercial customer by either banks or other lending institutions. With this provision, you can utilize a portion of the reserved money or exhaust the funds depending on your needs. The available funds in the allocated reserve are diminished as you make withdrawals but you can replenish the funds by making repayments. The payments made are inclusive of the principal as well as interest and any other additional charges.

As long as your account is current, you may retain your lines of credit for as long as you wish. If you want to increase your allocated reserve, you can communicate the same with your lender for consideration.

Home Equity Lines of Credit

A HELOC fund provides a readily available pool of financing that is determined by the equity value of your home. These funds rose to popularity during the American real estate bubble, and droves of homeowners took large amounts even when they hadn’t made significant payments on their mortgage loans. Although the heightened popularity disappeared with the bubble, HELOC funds are still a viable way of getting funds.

Today, these loans are popular among start-up entrepreneurs who have exhausted other forms of financing. However, most of them do a lot of financial planning before taking the shot. More often than not, they are driven by their belief in the business idea and are certain that the idea will work. To be successful with this form of financing, entrepreneurs should first test their product in the market to ensure profitability. Once that has been achieved, the HELOC funds can be used to penetrate the market and large scale production.

Credit cards vs. line of credit

There are several features that are similar between these two sources of credit. Just like a customer for lines of credit, a credit card holder is given a certain amount of revolving credit that can be spent from month to month. If you have a credit card, your allocation gets depleted as you make daily purchases as well as requests for cash advances. To replenish the allocated funds, you are supposed to make regular payments in monthly installments.  Similarly, it’s easier to qualify for a credit limit increase if you have a good payment history.

Line of credit and installment loans

Although there are lots of people who can’t seem to differentiate between the two, there are distinct differences. After you’ve received your installment loan, you will be required to make payments for several months to repay the entire borrowed amount. If you want to get another loan you have to apply again for funds. On the other hand, lines of credit loans are applied only once.

After you are approved, you get an allocation which will serve as your reserve fund. This means that you can’t borrow more than your allocated ceiling at any given time. Every withdrawal made reduces the available balance in the allocated pool and to replenish it, you need to make payments towards the borrowed money. Part of the payments made goes towards the principal amount, the administration charges, and the interest. Unlike installment loans where you need to apply for the next loan, you won’t be asked to apply for the next loan and all you need to do is withdraw.

What’s the better option?

Considering the factors associated with the other loan options that seem similar, it’s evident that lines of credit loans beat them. The fact that you won’t need to make applications every time you want some money makes this loan product very convenient. In addition, it gives you a practical way of improving your financial well-being if you incorporate a well-thought saving plan for the future.

If you intend to get one of these loans, you can count on Nation 21 to get the most appropriate deal. With a fast and secure online platform, you’ll get the right loan which can be approved in a few minutes. In fact, many people like you have trusted us to get a suitable loan and you can join them today.