If you’re on a tight budget, you may know how carefully you might have to manage your money just to stay afloat. Unfortunately, even when you think you have a good handle on your finances, unexpected expenses may be lurking just around the corner. The best way to handle unplanned emergency expenses is to have an emergency fund ready. But these can take time to build, and you might run into a surprise expense that you can’t cover with just your savings. This is where a personal line of credit may come in handy.
In this article we’ll discuss how you may qualify for a personal line of credit, some benefits of personal loans, and how to use loans responsibly.
What Is a Personal Loan?
A personal loan is money you borrow from a financial institution that can be used for a number of different circumstances. Something like a small-dollar personal line of credit is often used to deal with unexpected emergency expenses when you don’t have the savings to cover them.
So, what is a line of credit? It’s a revolving credit product that lets you borrow money up to the available credit limit that you’ve qualified for. This means that you can withdraw as much or as little from the line of credit, so long as you have available credit. Typically, you will only be charged fees, interest or other applicable charges on the amount you withdraw, not the entire credit limit available to you. A line of credit can act as a financial safety net when you’re unprepared to handle surprise expenses.
How to Qualify for a Personal Line of Credit
While not every financial institution will have the exact same requirements for you to be approved for a line of credit, there’s a good chance you’ll see some overlap. To qualify for a line of credit with MoneyKey, you must:
- Be of legal age to contract in your state
- Be a US citizen or permanent resident
- Be a resident in the state where our product is offered
- Have an active bank account
- Have a regular source of income
- Have a valid contact number and an active email address
You may find that other lenders have similar line of credit minimum requirements when you’re looking to apply for a line of credit.
Benefits of a Personal Loan
There are a number of benefits of personal loans. For starters, the application and approval for a personal loan can be relatively quick when compared to loans like mortgages or home equity lines of credit. If you’re approved, the money may be in your account in a matter of just a few business days.
Again, loans like personal lines of credit are generally best served to help you through unexpected emergency expenses, like if you have to take an unexpected trip to the emergency room, or your car gets a flat tire and you need a quick replacement so you can make it to work.
Cautions for People Wondering How to Qualify for a Personal Line of Credit
While there are some pros to personal loans and lines of credit, they don’t come without a few potential cons. One thing to consider is that if you’re unable to make your payments on time, you could potentially damage your credit. You may also run into some trouble if you have problems with overspending. If you have easily accessible credit available to you, you may be tempted to spend it on unnecessary expenses. You should always keep in mind that this isn’t free money, and the more you spend, the more interest can quickly accumulate.
Make sure that when you’re shopping around for online loans or a personal line of credit, you look around to find the best rates possible and always go over the terms and conditions of the loan carefully before you apply.
Learn More About Line of Credit Requirements
A personal line of credit may be a good fit for you, but you’ll never know unless you do the proper research. Explore the resources MoneyKey has created to learn more about lines of credit and other emergency financial solutions, and get the most out of the borrowing process!