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A line of credit is a financial account that offers you the option of borrowing money up to a certain limit. You can take out loans, or cash advances, when you need them, and use the money for any personal, family or household expense.
If you have cash flow needs that will change over time, a line of credit may help you accomplish your financial goals. So, what is a line of credit, and how do you get one? Learn the key features of a line of credit, how it compares to other types of debt and how it could benefit you.
A line of credit is a form of revolving credit that lets a borrower access the funds on demand, up to specific limit. Unlike an installment or payday loan, you can open a line of credit without immediately borrowing money. When the need arises, you can take a draw from your line of credit up to the max amount. Typically, you’ll only pay interest or fees on the amount you borrow, not the unused credit limit. And as you pay down your balance, you can borrow against your credit line again without having to reapply for a new account.
Applying for a line of credit is similar to the process of applying for a loan. You’ll start by providing information to a credit union, bank, or online lender. The financial institution typically performs a credit check and evaluates your creditworthiness to determine your rate and how much you can borrow.
Lines of credit can be secured or unsecured. A secured line of credit requires you to put up collateral, such as the mortgage on your house with a home equity line of credit (HELOC). As a result, secured lines of credit tend to have lower interest rates than unsecured lines of credit.
Elastic is an unsecured line of credit, which can be applied for even if you don't have equity in a home to secure a line of credit. Instead of charging an interest rate, Elastic is structured with just two fees: one for requesting a Cash Advance and one for having a Carried Balance from one month to the next.1
Personal lines of credit can be a good option when you don’t know exactly how much money you want to borrow and can also be used for unexpected expenses. In these cases, a line of credit gives you the flexibility to take out money as needed but avoid paying interest or fees until you actually borrow the money.
A good example is a home repair project. You may want to tackle things in stages over a period of time, giving you time to find good deals on supplies and labor costs. If you’re able to make a lot of progress in one month but are limited by your monthly income and savings account, you can tap into your line of credit to go ahead and make those purchases. Then, when you get paid again, you can pay off those draws or carry a balance and pay off your outstanding balance a little more slowly.
Loans are usually for a fixed amount and term, and sometimes for a particular purchase, though there are personal loans available that are for a fixed amount but without a stipulation about how you'll spend the money.
A line of credit gives you the option of applying for credit without knowing the exact amount or reason you may need to borrow at the time you apply. You could have a line of available credit open for months before using it, then get funds quickly when you need them.
A line of credit can have several benefits, including:
The potential downsides of a line of credit include:
A variety of factors can affect your ability to get a personal loan or a line of credit but applying for an Elastic line of credit is very fast and easy. You may be eligible for an Elastic Account if you meet the following criteria:
Next, you can submit an application online. Often, you’ll know within minutes or even seconds if you’ve been approved for an Elastic line of credit.1
If you have received a pre-selected offer for an Elastic line of credit, please note “pre-selected” means you have met our initial selection criteria to qualify for this offer of credit. When you respond to this offer of credit, we will confirm that you continue to satisfy the pre-selection criteria, including income requirements. We will also verify your email address and identity, which may include a confirmation of your Checking Account activity.
Elastic doesn’t charge interest like other traditional credit products. Rather, you pay a Cash Advance Fee of 5% or 10% for every Cash Advance you request, depending on your Billing Cycle. We understand you may need more than one Billing Cycle to pay your Balance. If you choose to pay your Balance over time, you are required to pay a portion of your Balance each Billing Cycle. Additionally, for each Billing Cycle that you have a Carried Balance of over $10, you will be charged a Carried Balance Fee ranging from $5 – $350. Please review the Terms and Conditions for details on the Cash Advance Fee and Carried Balance Fee.
There are many circumstances when having secured lines of credit, home equity lines of credits, or unsecured loans are the right call. However, when you have unpredictable cash flow needs or sporadic bills to pay, a line of credit can offer you short-term cash advances to handle the ups and downs of your expenses.
With Elastic, you have several payment options. It's easy to make your payments electronically through Elastic.com. You may make payments biweekly, monthly, or semi-monthly, depending on your identified pay frequency in your application. See the Terms and Conditions for additional information at www.Elastic.com/Terms-And-Conditions.
A line of credit is a bank product that gives you the ability to request cash advances up to a certain limit. In other words, a cash advance is a feature of the loan — not the standalone product. There are some similarities between cash advance credit lines and using your credit card for a cash advance:
There are also differences to consider:
You can read more about Elastic’s cash advance credit line to learn more.
1 We will charge a 5% or 10% Cash Advance Fee, depending on your Billing Cycle, for each Cash Advance you request. We will deduct the Cash Advance Fee from the amount of the Cash Advance you request, and deliver only the Elastic Cash amount to you. You are required to pay a portion of your Balance each Billing Cycle, and if you have a Carried Balance of greater than $10, a Carried Balance Fee of $5-$350 will apply. See the Terms and Conditions for additional information at www.Elastic.com/Terms-And-Conditions.
2 Cash Advances requested by 5:00 p.m. ET are typically made available to your bank the next Business Day if you elect to receive your Cash Advance by direct deposit, or mailed within 2 Business Days if you elect to receive your Cash Advance by a check in the mail. Consult with your bank for information on when funds will be available.