wondering how line of credit loans work

How Do Line Of Credit Loans Work?

The holidays and a new year brings hope to many people but it is also not a good time for an emergency. Yet, emergencies can happen and that can ruin all the holiday plans. It may be good to know how the line of credit loans can pay for those unexpected but sometimes costly expenses. 

Many types of financial institutions offer a line of credit loans but the rules to be approved vary for each institution. Generally, a line of credit is a way for the institution to give you access to money when you need it.

You draw on the credit line and it's put into your bank account. Interest is paid on only what you borrow. You repay the money and that makes it available to borrow again. Line of credit loans have some benefits including; you can be approved without drawing out any money, the credit line sits there until you need it, you can draw on it easily at any time when you need cash, and it can be used for a variety of unexpected needs.

How Line Of Credit Loans Work

Line Of Credit Loans Differ From Other Loans

Line of credit loans are different from other types of lending options like personal loans and credit cards. A personal loan is a one-time offer. You get approved for a set amount and the financial institution gives you the money. You can't borrow any more without paying the loan off.

A credit card is similar to a line of credit in that you use it when you need it and pay interest on what you borrow. The difference is in the amount allowed to be borrowed and how the money is used.

A line of credit is typically only used for larger ticket items. A line of credit is also usually greater than what a credit card offers.

How Do You Get A Line Of Credit?

Banks offer credit lines but getting approved may be challenging.
You would need a good to excellent credit score to get approved by a bank or credit union. Fortunately, there are other options to get a line of credit that will offer you peace of mind in case you need extra cash.

Title loan companies also provide lines of credit, which some call flex loans. This type of credit is different from a traditional title loan or a collateral loan. In those loans, you are putting up your title or some other collateral to back your loan.

You are given the full amount of the loan at once and can't draw from it again. You must pay off the loan to take out another title or collateral loan.

Line of credit loans don't always require collateral and what is required depends on the financial company offering it. Some shops require a vehicle title to back it while others may look to your job as to what your limit is and how to guarantee repayment.

woman reviewing online research on how line of credit loans work

Flex Loans In Tennesee

Tennesee Title Loans Inc. offers lines of credit as well as title loans and payday loans. Credit lines have a maximum limit of $4,000 and the approval process can be as quick as 30 minutes. You can even get money the same day or the next business day.

Tennesee flex loans are a little different in that you must apply for the loan in the store, but Tennessee Title Loans tries to make the process easy. You start by filling out the website form and then a loan representative will call.

Once you talk to them, you can go to the store and a representative will walk you through the final process.

Some things are required to apply for a credit line with Tennessee Title Loans, Inc. including:

  • A Tennesee driver's license or state-issued identification
  • Proof of income, such as your most recent pay stub
  • A lien-free title to your vehicle that's in your name
  • Your vehicle available for inspection

Make sure you have all these things with you when you go to the store to finalize loan details.

The line of credit with Tennessee Title Loans, Inc. is called a flex loan in that you have access to money up to $4,000 on demand for a set period. Interest is paid only on what you borrow. Once you repay borrowed funds, you can borrow it again, so this is an option for those who are trying to manage cash flow or who have several upcoming expenses.

Tennessee Title Loans welcomes all types of credit whether it's good, bad or none at all. There are locations all over the state so there is likely one near you.

Find Out If You Qualify

Filling out a simple inquiry form on the website could help you resolve worries about unexpected and upcoming unavoidable bills. You don't have to use all the money now and that can give you peace of mind that it's there when you need it.

You won't know how much you can be approved for until you fill out the form. Do it now and make the new year easier for you!

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Emma Frost

Emma Frost is a lifestyle and finance blogger with a talent for communication and a passion for financial literacy. She uses her writing talents to explore topics that help her readers gain financial stability and growth.