Need money to cover irregular income? Try a line of credit instead of a personal loan, credit card
From professionals to small traders to daily betting, the irregular influx of money often poses problems as monthly expenses remain more or less fixed. Even for employees, job loss or reduction in pay due to the employer’s financial hardship or during lockdown at the time of the pandemic can also cause financial problems.
To overcome this problem, people often need financial support, such as credit card, personal loan, etc. However, one of the lesser-known, but extremely beneficial, options is to use a line of credit from a bank or other financial institution.
“Line of credit is a loan product that allows employees and the self-employed, even if they have a stressed credit history or are completely new to credit, to access the line of credit on which they can. tap at any time. These lines of credit range from as little as 2000 to Rs 5 lakh. These lines of credit offered by Fintech companies go beyond withdrawing money from the bank, but offer innovative solutions such as online payment on a merchant site or even scanning and payment to any code. -UPI bars offered by FlexPay. This enables a digital credit card-like experience for customers who previously simply did not have access to credit cards. Customers can apply for these loans digitally on their phone even with incomes as low as Rs 8,000, ”said Anil Pinapala, Founder and CEO of Vivifi India Finance Private Limited.
While not all people can get a credit card, finding a personal loan and paying it off for another as needed is not an option. So, with flexible repayment options, line of credit is a much better option.
“As the market abounds with multiple credit products, new-age credit solutions like lines of credit are proving to be a better option, especially when it comes to dealing with small and unexpected expenses. It is very important to have an easily accessible line of credit so that it can be used for any unforeseen need for funds. It allows the user to withdraw cash as needed and pay interest only on the amount actually used, ”Pinapala said.
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“For example, if you have a line of credit limit of Rs 1 lakh, and you use Rs 50,000, then you will have to pay interest on Rs 50,000, not Rs 1 lakh, unlike personal loans. Once you have paid off the amount, your credit limit is immediately topped up and you can start using it again. You can withdraw money multiple times within your limit at no additional cost, and you can use it for a long period of up to 3 years. The best part is that it also helps you build your credit score while using it to manage your spending, ”he explained.
It is therefore always better for people with irregular income to have a line of credit sanctioned, because it is always better to be safe than sorry.
“It is strongly recommended that everyone have an approved line of credit available at all times because we never know when there will be an emergency or unforeseen need. However, be sure to go for a line of credit from the right provider otherwise you will end up paying high annual / maintenance fees that some providers charge. As this product offers lucrative features like flexibility, you may find that this product can sometimes be more expensive than a personal loan if you don’t use it consciously, ”Pinapala said.