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    How line of credit can help you during COVID-19 second wave?

    How line of credit can help you during COVID-19 second wave?

    How line of credit can help you during COVID-19 second wave?
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    By Anshul   IST (Updated)

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    One such financial tool which helps in times of uncertainty is the line of credit – wherein one can borrow up to the maximum limit, repay the funds and borrow again as needed.

    COVID-19 second wave and the subsequent lockdown have yet again impacted the financial wellbeing of businesses as well as the working-class population. While limited finances are persuading people to opt for credit, it is also imperative to analyse the financing options available and plan accordingly.
    One such financial tool which helps in times of uncertainty is the line of credit – wherein one can borrow up to the maximum limit, repay the funds and borrow again as needed.
    According to Gaurav Chopra, CEO and founder, IndiaLends, this avenue provides built-in flexibility on when and how much to borrow and how and when to repay.
    The big advantage here, Chopra states, is that once borrowers repay the amount, they have the option to withdraw or borrow funds again, and as many times as they need.
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    "Since consumers only pay for the funds, they actually use, a line of credit can prove to be more affordable in the end. Given the current situation, a line of credit would be the ideal choice as it gives borrowers the flexibility to use the funds as and when the need arises (and pay only for what they use and when) without having to apply for multiple loans," Chopra explains.
    He calls this an apt option to compensate for a temporary cash shortage which might be the case for a lot of people presently. It's important to note that interest in the case of a line of credit is charged only on the amount one has borrowed, till it is repaid.
    However, only those who have the capacity to repay the borrowed amount in a short period should go for it.
    Others should stick to different options such as a persona loan. Especially those who lack financial discipline and may tend to borrow unnecessarily more than they need, without having the capability to repay over a short period, should prefer taking a personal loan for their immediate needs, experts opine.
    Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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