5 Things To Consider When Looking For A Line Of Credit
by Arnab Dey Finance Published on: 22 December 2022 Last Updated on: 12 August 2024
Finding a line of credit that fits your emergency can be challenging, especially if you don’t know what you should be looking for. Whether you’re an amateur or a veteran borrower, here’s a checklist that everyone should follow.
Checkout Five Crucial Things To Consider When Looking For A Line Of Credit
1. The Eligibility Requirements
First of all, you want to find out what you need to apply for a line of credit. You can find that information by getting in touch with a lender, either in person or online.
Going online can cut down on some of the legwork you need to do to complete this task. With a few clicks of your mouse (or tap on your screen), you can open a website like Fora to compare it with other lenders.
What you see at Foracredit.ca won’t necessarily apply to other lenders, even if they offer a similar line of credit loans. Each lender may have its own unique list of requirements, so it’s important to review them separately.
2. The Credit Limit
Next on your list is the credit limit. You want to make sure that once you qualify and apply, you’ll get enough to help with your emergency. It won’t make much sense to get a line of credit that only covers a quarter of your expense, after all!
Once again, these limits may vary from lender to lender. How much they offer may depend on your application as well.
3. The Cost of Borrowing
Almost all lenders apply interest and finance charges to the amount your draw against your limit. How much these fees wind up being can significantly impact your loan, so it’s crucial you crunch these numbers.
Compare this information with your budget to ensure you can handle your payments while juggling other bills.
4. The Lender’s Reputation
Getting a read on your lender is another important step of the borrowing process. You’ll want to make sure they have a proven history of providing helpful loans and flawless customer service.
One of the easiest ways to do this is by typing something like this into your next Internet search: [lender’s name] + scam. This phrasing pushes any possible issues to the top of your results.
From there, it should be easy to find past customers’ reviews, so you can see how these lines of credit work from the borrower’s POV. While a perfect 5-star rating may not be necessary, you should avoid any lender that has a long list of 1-star reviews.
5. The Minimum Payment
Generally speaking, you should only ever withdraw from your line of credit when you know you can pay it all off by the next billing statement.
But let’s be honest — real life can get in the way of this financial rule. A blown tire needs replacing if your car is the only way you can get to work and earn a paycheque.
If you can’t pay back everything in one lump sum, look to your minimum payment to understand what you must pay each month. You should also sit down with your budget to free up as much cash as possible for this bill.
These five factors can help you compare your options and narrow in on something that works. Follow this list any time you need to borrow, whether that’s today or sometime down the line.
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