Opening lines of credit
Posted on Dec 4, 2000 08:15:27 AM
Credit line offers the most reliable customers.
When you open a line of credit the creditor bank is determined by the maximum amount that it agrees to lend to the borrower, and the period during
which this consent is valid. During this period the client at any time can get the loan within the set.
Line of credit – an agreement between the bank and the customer whereby the bank agrees to a certain period to provide loans within the agreed total amount.
The Bank may refuse the borrower in obtaining a loan to open a credit line in only two cases:
1) in violation of the borrower the loan agreement (for example, misuse of credit);
2) when establishing the deteriorating financial condition of the borrower.
In all other cases, the customer can receive credit for the required amount (within the credit line) without further negotiations with the bank and without any additional processing.
There are two types of credit lines.
Non-revolving credit line, if you open it after the loan and repay the debt on his relationship between the bank and the borrower ceased completely.
Revolving line of credit (often called a revolving credit) when you open a bank term line of credit is established and its periodicity, and the borrower may, after paying for the previous line of credit at the end of the crediting period to re-use line of credit with an initial amount during the initial term.
Features of the calculation of payments for the use of credit lines:
The first payments to repay the loan amount and interest start to arrive before the end of the line of credit over a certain period of the contract after receiving the initial loan amount.
In calculating the amount of interest rate debt accounted for the loan amount that is actually used by the borrower in the billing period.
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