3. Line of Credit

This is a revolving credit with a limit, just like a credit card facility. The Line of Credit is generally issued with a cheque book and/or a credit card. These items are linked to the account and any spending will draw down on the loan. The advantage is that any surplus funds can help to reduce your overall loan balance. The disadvantages are bank fees are charged in association with the credit card or cheque book. Generally the interest rate is higher than the Standard Variable Rate loan.