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


The changes would be automatic when the repo rate changes.

From professionals to small traders to daily betting, irregular inflows of money are often problematic as monthly expenses remain more or less fixed. Even for employees, job loss or lower pay due to employer financial hardship or during lockdown at the time of the pandemic can also cause monetary problems.

To overcome this problem, people often need financial support, such as a credit card, personal loan, etc. However, one of the lesser-known, but extremely beneficial, options is to obtain 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. use anytime. These lines of credit range from Rs 2,000 to 5 lakh. These lines of credit offered by Fintech companies have gone beyond withdrawing money in the bank, but offer innovative solutions such as online payment on a site merchant or even scanning and payment on any UPI barcode 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 income as low as Rs 8,000, ”said Anil Pinapala, Founder and CEO of Vivifi India Finance Private Limited.

While not everyone can get a credit card, looking for a personal loan and paying it off for another when 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, unforeseen 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 only pay interest on the amount actually used, ”Pinapala said.

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“For example, if you have a 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 use it over a long period of up to 3 years. The best part is, it also helps you build your credit score while you use it to manage your spending, ”he explained.

So, it is always better for people with irregular income to have a sanctioned line of credit, as precaution is always better than cure.

“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 such as flexibility, you may find that this product can sometimes be more expensive than a personal loan if you don’t use it conscientiously, ”Pinapala said.

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