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Interested in a line of credit loan but unsure of what it entails? Read this!
Adulting, am I right? Some days you love the freedom of being a grown-up making significant life decisions, and on other days you don’t feel as confident. Don’t worry, we all go through uncertain times and that’s nothing to be embarrassed about.
Money and finances form a major component of our lives. With inflation being sky-high, it is not uncommon for Americans to struggle when it comes to money. Even if you’re doing well, it takes one unexpected bill or one medical emergency to mess up your budget. This is where you start looking for ways to get some money fast.
You might be one lucky duck if you have family and friends to rely on when times are rough. Not everyone has that option. That is why some people need the means to borrow money before their next payday.
In this article, we will discuss a popular type of loan option and everything it entails:
- What is a line of credit loan?
- How to draw funds from a line of credit?
- How do line of credit payments work?
- Understanding line of credit billing statement.
- Benefits of your line of credit.
Line of Credit
In simple terms, a line of credit loan is a personal loan that acts a lot like a credit card. You get an amount of money that you can borrow, up to a set credit limit. A line of credit is a type of revolving credit. When you pay back part of your loan, you’re able to reborrow it at a later date.
Say you are approved for a credit limit of $1000 and you need $650 for an expense. You can draw exactly the amount you need for $650 and have $350 remaining in your line of credit. You can then pay off the amount you borrowed, or you can take out more of the remaining amount, depending on your situation.
A line of credit loan is extremely convenient. You only have to apply once. Additionally, you can make a draw as often as you need, as long as you’re paying on time, have available funds, and are keeping your account active.
While other lenders may run a hard credit check on you before approving you for a line of credit, Net Pay Advance doesn’t do that. When you choose to borrow from Net Pay Advance, your credit is never a concern. Net Pay Advance doesn’t do hard credit checks, so your credit is unaffected to apply. No credit? Bad credit? No problem!
How to draw funds from a line of credit
You can draw from a line of credit in a few simple steps:
- Log into your account
- Select the option “Request a Draw”
- Enter the amount you want to withdraw
- Click on “Confirm”
Once you complete these steps, the amount you selected will be deposited into your account, and you can access funds.
How do payments work with line of credit loans?
When you take out a loan, you’re required to pay it back within a period of time. It is only natural to wonder what payments will look like when you take out a line of credit loan.
Interest on a line of credit loan is charged daily for each day the money is borrowed. That’s why we recommend paying such loans off as soon as you can. Payment schedules may look different with different lenders. Some mandate a draw period, where you can draw funds and start making minimum payments towards the borrowed amount, and then there’s a payment period where you must pay the remaining amount you owe. Others might set a fixed amount that needs to be paid within certain periods of time, just like with an installment loan.
At Net Pay Advance, we like to put you first by offering the flexibility to borrow and pay as you wish. We do charge a minimum payment plus past dues, interest, and fees at every billing cycle. Your billing cycle payment schedule is set up to coordinate with your paydays! This means you could be billed bi-weekly, bi-monthly, or monthly depending on how often you get paid.
Please be aware that different states have different laws when it comes to line of credit loans. Check out our rates and terms for the regulations in states where we currently operate.
How to make a payment
When you borrow from Net Pay Advance, we make paying back a convenient process. Our customers just log into their accounts and go to the “Make Payment” button in their portal. Then they can choose between two types of payments, one being the minimum amount that is due on a set date and the other being an amount of their choice. When selecting the second option, customers will need to enter an amount that is higher than the minimum payment due and up to a set amount.
Just follow the steps shown below and you’re good to go.
![Green panel at the top bears the title how to make a payment in white text. Below this panel, there are three bullet points. The first point says, in the Net Pay Advance portal, select the make payment option. The second point says, select which type of payment you want to make. The top option is the minimum due on your current billing cycle. The bottom option allows you to specify the amount you’d like to pay toward your account balance. The final point says, after submitting payment, you will receive confirmation for your records. The right-hand-side of the graphic shows a screenshot displaying the word select payment at the top and two options below. The first one says, current due: $50 due on May 10, 2024. The second option says any amount: up to $823.43 [Min $50.00]. An empty field is left just below. There are two buttons saying previous and next at the bottom.](https://netpayadvance.com/wp-content/uploads/2024/08/How-to-make-a-payment-1-1-1024x572.webp)
Understanding your line of credit billing statement
Here’s an example of one of our billing statements. There are several components to a billing statement. Take a look.
We’ll take a closer look at the various elements of this line of credit billing statement.
Customer ID can be explained as a unique number we assign to each customer so that we can correctly identify them and maintain our record accurately.
Loan ID just like Customer ID, an identifying number we assign to every loan for our records.
Credit Limit can be defined as the maximum amount you are approved to borrow from us. You can borrow any amount up to that limit. We decide what a customer’s approved credit limit is based on several factors from their application.
Available Credit is the amount you can currently borrow. Once you start drawing and paying off your line of credit, your available credit will keep changing.
Account Balance is the total outstanding amount a customer owes us.
Statement due date means the date on which the remaining amount is due to be paid.
Days in billing cycle is the number of days in the statement period.
Statement period is a measure of the time period between two statement close dates
At Net Pay Advance, due dates are based on a customer’s payday schedule. This makes it convenient for our customers to make payments after they get paid from their job.
Transactions show a customer making draws over the statement period. They also show on what dates these dr1aws were made, description of what the item is, and how much money was drawn each time.
Reference # is a unique number we assign to track a customer’s transaction activity for our records.
Interest the interest that was charged during the billing period is broken down below. As you can see, there’s a small interest charged daily. Daily interest charges will be based on the state you’re in and the amount borrowed.
Account Balance is the total amount a customer owes us.
Minimum Payment Due is the minimum amount a customer is required to pay during their current billing cycle.
Payment Due Date is the day the minimum payment is due.
Please note that the account balance signifies how much a customer currently has loaned out and it is also the maximum payment that could be made. This showcases the flexibility of line of credit loans. You can either pay the minimum amount due, pay the account balance and essentially pay off the loan, or pay something in-between to decrease your daily interest charges in the next month and replenish your available credit.
Benefits of a line of credit loan
We get it, you might have other options when it comes to loans. Before you make a choice, it is important to know the upsides of getting a line of credit loan such as:
- Easy online application process
- No hard credit check
- No credit score requirements
- Quick decision
- Once approved, make a draw to access funds if you have a valid debit card on file
- Freedom to use funds as desired
- Repayments sync with borrower’s payday schedule
- Borrow what is needed, not the entire approved amount
- Flexible payments: borrowers can pay in full, make minimum payments, or pay something in-between
- Make draws any time as long as payments are up to date and there is available credit
These benefits are available to borrowers when they choose Net Pay Advance as their lender. We can’t speak for other lenders, but we offer the above benefits and more to our customers.
Ready to take a step towards getting funds?
Regardless of why you need funds, it is always good to know there are options available when you’re strapped for cash. If getting a personal loan isn’t what you want, we have a list of alternatives you can consider.
At Net Pay Advance, we strive to empower our customers when it comes to money and finances. Our dedicated team continues to create and grow our personal finance blog, which is a hub of information. Consult our financial glossary to tackle unfamiliar terms as you navigate your own financial journey. Start your journey today with a line of credit from Net Pay Advance.
For all of life’s unexpected lows, we’re here to offer financial support. Don’t hesitate to reach out to us with your questions or concerns. Contact Us.