Need money to cover irregular income? Try Credit Line instead of personal loan, credit card

From professionals to small shop owners to daily wagers, irregular inflow of money often causes problems as monthly expenses more or less remain fixed. Even for salaried people, loss of job or salary cut due to financial hardship of the employer or during lockdown at the time of pandemic may also cause monetary trouble.

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To overcome this problem, individuals often need monetary support, like that of credit card, personal loan etc. However, one of the less known, but immensely beneficial options is availing a Credit Line from a bank or any other financial institution.

“Credit Line is a loan product that enables salaried and self-employed individuals even if they have a stressed credit history or are completely new to credit to provide access to the Line of Credit that they can draw upon at any time they need. These Credit Lines range from as low as 2,000 to Rs 5 lakh. These Lines of Credit offered by Fintech companies have gone beyond the withdrawal of the money into the bank but are offering innovative solutions like paying online at a merchant site or even scan and pay at any UPI barcode as offered by FlexPay. This is enabling a digital credit card like experience for the customers who prior to this simply didn’t have access to credit cards. Customers can apply for these loans digitally on their phones, even with incomes as low as Rs 8,000,” said Anil Pinapala, Founder & CEO, Vivifi India Finance Private Limited.

While not every individual may obtain a credit card, sourcing a personal loan and repaying it to get another one as and when needed is not a feasible option. So, with flexible repayment options, Credit Line is a much better option.

“While the market is brimming with multiple credit products, new-age credit solutions like credit lines turn out to be a better option, especially when it comes to meeting small and unexpected expenses. It is very important to have a credit line readily available to access so that it can be used for any unexpected need for funds. It enables the user to withdraw money as and when it’s required, and pay interest only on the amount actually used,” said Pinapala.

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“For instance, if you have a credit line limit of Rs 1 lakh, and you utilise Rs 50,000, then you will have to pay interest on Rs 50,000, not on Rs 1 lakh, unlike personal loans. Once you repay the amount, your credit line limit gets immediately refuelled, and you can start using it again. You can withdraw money multiple times within your limit without any additional charges and can use it over a long tenure of up to 3 years. The best part is, it also helps you build your credit score while you use it to manage your expenses,” he explained.

So, it’s always better for the individuals having irregular income to have a Credit Line sanctioned, as precaution is always better than cure.

“It is highly recommended for every individual to have an approved line of credit that is available for access anytime, as we never know when there will be an emergency or an unexpected need. However, ensure that you opt for a credit line from the right provider or else you will end up paying high annual/maintenance fees charged by some providers. As this product offers lucrative features such as flexibility, you may find this product can at times be more expensive than a personal loan if you don’t use it mindfully,” said Pinapala.