A line of credit is defined as an arrangement in which a bank or any other lender, extends specified amount of money to a specified person for a specific period of time.
This is only applicable for unsecured loans.
In other words, it cannot be extended to some individuals and it is not applicable to all lenders.
This form of service has some advantages to the borrower.
Some of the privileges they enjoy include being eligible for cash advances from the particular lender.
They also include overdraft protection.
This means that, this particular individual can write checks worth more than what they have in their respective accounts.
This service allows an individual to have the advantage of revolving line of credit.
This means that an individual can borrow a particular amount of money over and over again after paying off the previous amount advanced by the lender.
The home equity loan is almost like a second mortgage, whereby money is borrowed against the value of the home.
The home line of credit, normally referred to as the home equity loan is divided into two.
The most common of these is the closed end equity loan which allows a certain amount of money to be borrowed against the value of the home.
More money cannot be borrowed on this kind of loan.
The other type is almost the same as the first one, the difference being that, this one allows more money to be borrowed on top of the previous amount borrowed.
There are many advantages involved in this service that an individual can gain from if they can attach themselves to it.