line-of-credit

Vocabulary Word

Definition

A 'line of credit' is a unique kind of loan from a bank. Unlike a regular loan where you get all the money at once, a line of credit lets you borrow only when you need and repay over time.

Examples in Different Contexts

In personal finance, a 'line of credit' can be used as a flexible borrowing option for individuals to finance large purchases or emergencies. A personal finance coach might suggest, 'A personal line of credit can be a prudent financial tool for managing unexpected expenses.'

Practice Scenarios

Business

Scenario:

Our additional hiring would increase operational costs substantially, let's discuss the best financing options we have.

Response:

Considering the market's volatility, I suggest we utilise our line of credit to cover the short-term costs.

Personal-Finance

Scenario:

Our home-improvement project overran the budget. We should explore ways to cover this cost without draining our savings.

Response:

The home-equity line of credit could be a smart choice. We can use it for the project and pay it back over time.