1-855-630-LENDLog In
Contact Us
Log In
Home > Blog > Is a Line of Credit Right for Me?

Is a Line of Credit Right for Me?

Updated on Monday, July 15, 2019

Line of Credit

Personal loans can cause personal dilemmas when trying to determine the right choice for you.

Taking out a personal loan can be a tough decision. There are so many options available - it makes our heads spin! We are personally partial to a line of credit. But you might be wondering "what is a line of credit, and is it right for me?" To avoid any further headache, we've compiled some information that we think will be helpful for you and list of questions to consider to help you decide if a line of credit loan is your best path.

What is a Line of Credit?

A line of credit works similarly to a credit card. If you are approved, the lender gives you a set credit limit and you are able to borrow as much or as little from that credit limit as you please. A line of credit is an open-end loan, meaning there is no set term and the loan remains open as long as you need it. You can continue to borrow from your credit line without having to reapply for a new loan. Typically with a line of credit, you make payments that include what you borrow plus daily interest applied to the borrowed balance. As you make your payments, what you paid on the principal balance (the amount paid on top of interest) is then added back to your available credit once the payment clears.

How Do I Know a Line of Credit is Right for Me?

There are many factors that go into determining the right type of personal loan for you, but ultimately, it is a decision that you must make for yourself and your finances. Below are a few things to consider when determining if a line of credit is the right choice for you:

  • Do I want a flexible loan?

  • If you're looking for a loan that gives you flexibility, then a line of credit could definitely be what you're looking for. There are no set terms; you can take out as much or as little of your credit limit as you'd like and you only pay for the time you use the funds.

  • Do I need ongoing access to money?

  • You may not need an open-ended loan and that's okay. You don't have to keep your line of credit open for longer than you'd like. If you carry a zero balance, you will be able to close the loan no problem. Many lenders also give you the option to keep your credit line open with a zero balance, just in case you need to access more funds in the future. For example, at LendDirect, we keep your line of credit open for up to one year with a zero balance, unless you tell us otherwise. You never know where life takes you and not having to reapply for another loan is a great way to have a backup plan in case you find yourself in need of funds down the road.

  • Is the interest rate something I'm comfortable with?

  • The best bit of advice we can give is to weigh all your options by getting the rates and terms of each loan you're considering, and determining what payments with interest will look like. If you get as much money as you think you'll need without having to pay as much in interest, that loan would most likely be the right choice for you.

  • Do I trust the lender?

  • As much as we want to believe that companies have our best interest in mind, we all know that there are some shady businesses out there. Before applying with a lender, search their website for security certifications and memberships to consumer lending associations such as the Canadian Lenders Association. These associations have best practices in place that all members have to follow to protect You - the consumer. Another good indicator of the validity of the company is to read their reviews online, either ones they have on their website or on their Google Business page. And finally, if you are approved, read all of your loan documents (fine print included!) before signing on the dotted line.

If you said 'yes' to all of these questions, a line of credit may be the right option for you. They're flexible and easily meet your ever-changing needs. You could stop continually applying for payday loans or installment loans to get the funds you need because a line of credit gives you this flexibility without you needing to reapply. Making a decision on a personal is hard because there are so many different options to consider. Just do your research and the right option for your needs will come.

Interested in taking out a line of credit? Learn about a LendDirect line of credit.

Recent Articles

The information provided on our blog is for general informational purposes only. All information is provided in good faith, however we make no representation of any kind, express or implied, and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

  • Contact Us
  • Communications Policy
  • Privacy Policy
  • Terms of Use
Norton Secure Logo
Safe Secure and Confidential
Interac e-Transfer Logo
Canadian Lenders Association Logo
© 2024 LendDirect. All Rights Reserved.

Interest rates range from 29.99% to 46.93% Annual Interest Rate. Subject to eligibility, credit check, underwriting and approval. Terms and conditions apply. Credit limit and interest rate are based on creditworthiness at time of application. Payments are due on scheduled income deposits. Generally, applicants who are most creditworthy qualify for the lowest rates. BC Licence #83734

Lending decisions and funding times subject to system limitations.

Interac e-Transfer®: 15-minute funding available only when using Interac e-Transfer® (up to $10,000). Payments and funding via Interac e-Transfer subject to bank processing times, bank participation and system limitations, including daily send limits. Interac e-Transfer is a registered trade-mark and the Interac logo is a trade-mark of Interac Corp. Used under licence.

Cash advances only available up to approved credit limit; $25 minimum cash advance requirement; restrictions may apply.

Loan Protection: Must be 18 years of age or older, and under 70 years of age to be eligible. The optional Loan Protection Plan is a Credit Group Insurance Plan Underwritten by Canadian Premier Life Insurance Company and Canadian Premier General Insurance Company.