line of credit

**Line of Credit**

A line of credit is a flexible loan arrangement between a financial institution and a borrower that allows the borrower to access funds up to a predetermined limit at any time. Unlike a traditional loan, where a fixed amount is borrowed upfront, a line of credit provides ongoing access to funds, which the borrower can draw from, repay, and draw again as needed. This makes it an ideal financial tool for managing cash flow, handling unexpected expenses, or financing short-term needs. Interest is typically charged only on the amount borrowed, not the entire credit limit. Lines of credit can be secured, using collateral such as property, or unsecured, based on the borrower’s creditworthiness. Common types include personal lines of credit, home equity lines of credit (HELOCs), and business lines of credit.