Explain Line Of Credit Loan

Why choose one over the other?

Both loan use a mortgage (usually a second mortgage) as collateral. A Home Equity Loan is a fixed term, fixed amount loan.

Example: You borrow $25,000 for 10 years. The rate may be variable, but is more commonly fixed. So $25,000 for 10 Years at 8% interest, your payment would be $303.02 per month for 120 months. At the end of the 10 years the loan is paid in full.

A Home Equity Line of Credit (HELOC) is a revolving account like a credit card. You get a specific limit, say $25,000 and you can draw on it and pay it back and borrow again. You commonly will get either a credit card and/or a check book to access the funds in your account. The draw/borrowing period is usually 120 months... payments can be interest only or 1/120 of the principal plus the applicable interest. If there is a balance owed at the end of the draw period, the lender will either write a new loan or HELOC. Interest is almost exclusively floating rate, usually tied to the prime rate.

Hope this helps.

2006-08-19 06:58:32 by  

A home equity loan and a home equity line of credit both provide money from the value of your home. But each one has its pros and cons.

Never taken out a loan, and have had one credit card for the last three years, so I am a complete novice when it comes to all these bank terms. For what it's worth, I bank with USBank.

Anyways, I need a new computer, for which I don't have the funds. I looked around on the USBank website, and found two options that looked interesting: Personal Loan, and Premier Line if Credit.

About the loan: How does that work? Does the money go into one of my accounts (I have checking, savings, and a Visa with them)? Or is it managed like an account of it's own?

About the credit line: Is it really hard to get approved? Should I just apply for another credit card?

I know I should just go to my bank and ask, but I would like to get to know more first, and see if anyone has any experiences they can share. Thank you!

Well your best bet, depending on your credit score would be to go to the bank and request a personal loan. When they ask how much, tell them how much you want your computer to be. They are gonna wanna know what you want the money for too.
With a personal loan, they would either write you a check or deposit the money in your bank account, but the loan itself would have a different account number and you would have monthly payments with an interest rate. Once that is paid off, you are done.
I believe a Premier line of credit is something that they give you with a credit limit and you make monthly payments, but it's a revolving line so you keep using it over and over.
Depending on where you want your computer from, you can possibly skip this entire process and finance through the computer place. For example Dell offers their own financing and you would just pay them like you pay your credit card bill. Once a month. However, if you got a loan thru US Bank, I'm sure the interest rate would be a lot lower.
You could also consider opening another credit card with US bank and buying it that way, but you would have to look at the rate and see where you would get the better deal.
Good luck

2007-02-11 23:25:25 by J.

if I have bad credit. :)

I mean, I can't get a line of credit, a loan, etc.....

so --- please explain why it is a better deal than a normal bank like wachovia. Thanks.

ps -- working on the credit thing, so please don't scorn.

IF YOU POST SPAM YOU WILL BE REPORTED.

While credit unions are similar to banks, you are more likely to get personalized service at credit unions, especially smaller ones. Some credit unions have programs to help people rebuild their credit or re-establish checking accounts. There is less "red tape" at smaller credit unions, so they can be more flexible to work with. They are more likely to give you a chance than a big bank.

If you are sincere and truly trying to fix your credit, see if there is a credit union in your area that is willing to help you. I think you'll be pleasantly surprised.

Hope this helps. Good luck!

2009-11-06 11:41:51 by and stuff

or a line of credit as they call it, and then two years later inform you that it is changing your terms from a fixed rate of 7.99% to a variable rate based on the prime rate plus some other mathematical mumbo jumbo?

Can someone please explain how we would calculate our new variable rate?
No it was fixed for the life of the loan. Bank of America has done this to many people with the same type of loan I have.
this is a line of credit not a mortgage! Our mortgage is fixed at 6%!

the key is that you got a line of credit - in the fine print of all lines of credit the companies have right to adjust the terms of the line within changing market conditions. what is best to get is an installment loan. especially if you don't want to get any more money, just pay off the balance of what you owe. an installment loan is a fixed rate for a set period of time & the only way it can be changed at all - even the due date - is by refinancing the loan.

there has been some legislation passed that required companies to putt an exact date as a due date if your previous due date was set as the last day of the month (mostly credit unions do that) so most of them have changed the due date to either the 15th or 28th. but that is the only instance where i have seen an installment loan change anything.

to calculate your new variable rate. you need to know your spread. lets use round figures. for our expample - prime rate is month is 5%, your spread is 4%. so for this month your rate is (5+4) 9%. prime changes to 3%, (your spread will not change) your new rate is (3+4) 7%...

Find out your spread - find out the prime rate that they use as it could be from the libor index also.

2009-10-15 11:27:23 by nottoday

I'm 19 years old and I'm looking to buy a truck ... i need a 4 x 4 for our winter here because we get lots of snow and we always need a truck for different reasons.
The truck im looking at is between 17 000 to 19 000 , and it is most likely going to be a private sale. Im a student but i work a part time job ( usually between 20 -25 hours a week). What is the best way to go about getting this loan? I know I obviously need a cosigner (my mom - good credit), but do you have to pay a certain amount up front?
I've worked out my income and I know I can pay off about 500 monthly, plys 250 for insurance by 250 for gas, so I have that covered, but I havent paid off my entire credit card yet. is that going to affect anything? and I have a minimal amount in my bank account at the minute but i know i can make the payments. do u think they will not approve me, even if i have a cosigner??
it's a private sale, so can i take out a car or personal loan, and get the money right away? how does it work?!!! someone explain please!

oh and am i too young for a line of credit?

i realzie its expensive but thats because im not going to settle for a piece of old crap. i rather shell out money for a realible import truck then get an old domestic truck .. plus a truck for 5000$? thats ridic, it wouldnlt last long, no thank you. i prefer to shell out money for the loan.

WHOW,,COWBOY!--that is WAY too much money for you to spend right now. you need to get a much cheaper truck.dont sucker your mom into co-signing this for you . you, will be sorry if you spend that much. you should find one for 3500 to 5000 max. and take a economics course to you will learn to handle money. I hope no one will co-sign for you so come to your senses. before you make this mistake. your friend ,bandett +++++ stop thinkin about much money you can spend and google"evolution of dance" for a laugh.

2008-09-20 16:23:19 by livetoworkout