Our compatriots, as well as in foreign countries, it has long been possible to choose a variety of credit products. At the same time, each person always has the opportunity to choose exactly the line of credit that most clearly satisfies a number of his basic requirements.

Recently, such a type of loan as opening a line of credit has become increasingly popular among various segments of the population. Unlike the usual, classic lending (), drawing up a credit line provides for the possibility of using borrowed funds Money exactly when the borrower needs it, while interest is paid only on the amount that has actually already been used (spent).

Thus, in legal terms, a line of credit is a written contractual agreement between a credit institution and a borrower, according to which the lender provides the borrower with a loan within a specified time in the amount of a pre-agreed amount, that is, a limit. In this case, the borrower has the opportunity to receive bank loans under the credit line repeatedly, and the bank, in turn, issues a line of credit for its client with an established monetary limit, more than which the borrower will no longer be able to spend.
When drawing up a credit line agreement, two main conditions are always taken into account:

– the limit for issuing funds is determined, that is, this is the total amount of debt that a credit institution can provide to its client for the entire term of the credit line agreement;

- and a clear debt limit is established, that is, the borrower receives the maximum possible loan, if timely repayment of which, he has the opportunity to use credit funds again.

Main advantages registration of a bank credit line is as follows:

– in order to conclude an agreement with the bank, it is enough to provide the package only once necessary documents. Therefore, there is no need to constantly collect piles of papers to get the required amount;

- the borrower has a great opportunity repeated use of funds received when opening a line within a predetermined limit;

– the borrower decides for himself what loan amount would be best for him to take, naturally, within the framework of the concluded agreement;

– there is an opportunity to take out a loan in foreign currency;

– the borrower can use the loan provided in any quantity, within the maximum limit of the credit line, established by the bank;

– the loan can be repaid not only for the entire period at once, but also on the date specified in the agreement;

– interest is paid only on the amount of money that has already been used and spent.

However, credit lines have several disadvantages that cannot be ignored:

– in the event that the borrower did not manage to spend the entire amount borrowed money within the time frame and in the amount of the established line limit, the credit institution may impose certain sanctions on it, for example, a penalty;

– an extension of an already open line can be issued only when the borrower has fully repaid his debt to the bank and if there is no negative balance on his account.

Main types of credit lines: revolving and non-revolving credit line

Most modern financial and credit institutions provide clients with a good credit history with two types of credit lines: revolving and non-revolving loans. However, each of these options has its own significant differences.
So, renewable A line of credit is considered one of the most popular types of lending among a huge number of borrowers. This is due to the fact that the opening of a revolving line implies for the borrower more interesting opportunities, namely: you can repeatedly use borrowed funds within the limit provided for in the agreement.

Moreover, the terms for which a revolving credit line can be issued can be up to three years, with a minimum of one year. The borrower can use credit amount at your own discretion, that is, do not spend it all at once in one go, but do it periodically as needed.
The interest that will have to be paid on the revolving line of credit will be accrued only on the amount of money that was spent by the borrower. But do not forget about the amount of the principal debt, which will also have to be paid every month.

And what is most remarkable is that the borrower can use the amount of the principal debt that the borrower deposited into the account again. That is, for example, if a borrower pays off his principal debt in the amount of a thousand rubles this month, he will have a unique opportunity to use the same thousand again at his own discretion. And so on until the revolving credit line is open.
Another thing, non-renewable a line of credit, which in essence is very similar to the consumer loans we are used to. The point is that the agreement with the bank stipulates in advance all the conditions of use credit limit along the line: the general terms of payment by the borrower of the tranche (payment) and its size. In this case, it does not matter at all how quickly it will be repaid bank debt. Therefore, a non-revolving line of credit will be most beneficial to those borrowers who periodically need relatively small funds or when using targeted lending.

At the same time, the borrower must always be sure that the lending institution, if necessary, will provide the borrower with a new tranche. As soon as the borrower has used all possible tranches and the limit has been completely exhausted, he will have to begin repaying the debt to the bank account.

In any case, before deciding to issue a particular credit line, you need to calculate how profitable it will be and whether it would be easier to use another credit product.

#4

That is, I can go to the bank and not only take consumer loan, and draw up an agreement to open a credit line?

#3

Here are the banks. If only my wife and I had the opportunity to save money. then they wouldn’t take out housing on credit. But life is harsh and there is nowhere to go. We will give the bank 3 million in 10 years. Great, what can I say... What kind of credit line we have in the agreement, I have no idea at all, the main thing is I know how much I still owe... fucked up...

#2

This is not something that often misleads clients - it is rather the norm of all banks, not to say something, not to finish it, or simply not to show it. Credit line- this is not a concept in which you can “get lost”; there are more complex terms.

#1

Thank you for the article about credit lines; in terms of theory, it is very useful to know what it is. The banks themselves do not explain their terminology very well, and this often confuses clients. Your site helps such people!!!

The VTB revolving credit line is a special type of loan that is issued to legal entities and individuals. The banking institution provides its client with money in the amount of the limit. In this article, we will look at what a line of credit is and under what conditions banks provide it.

A line of credit, unlike a regular loan, allows the borrower to borrow money during the entire period of the agreement. Depending on the terms of provision, there are several types of this type of loan.

Non-revolving line of credit

This type of loan involves issuing money in installments (tranches). In essence, this is a classic loan, but issued in installments.

The bank opens a loan account for the client, in which a certain amount is placed sum of money. The borrower withdraws this money at his own discretion. The agreement may stipulate that money is withdrawn monthly or in any amount at the request of the client.

Typically, such products are used by organizations for business activities.

For example, a company opens a non-revolving line of credit in the amount of 1 million. The organization withdraws money 4 times a quarter of a million. Once all the money is exhausted, the line is closed and the company must repay its debt with interest, similar to a loan.

Revolving credit limit

A revolving (revolving) line provides access to borrowed funds within the limits established by the agreement, but a prerequisite is the repayment of an existing debt. After making a payment to repay the debt, the funds are returned to the client’s account, and the company will again be able to use the loan.

Is a revolving line of credit beneficial?

The revolving line is the most convenient lending for business entities. Having collected documents once and received approval, the client gains access to loan funds. By observing the stipulated limits and repaying their debt on time, companies can effectively use this type of loan.

Framework credit line

A framework credit line is targeted lending. Funds are issued to finance a pre-agreed project or purchase of specific equipment.

Often it is the targeted nature of the loan that makes such bank products unattractive for the client. However, given the fairly low rates for this product, some organizations choose it.

Specific types

You can also distinguish a contract line. It is a special type of loan in which banking institution opens an account for his client. The borrower has the right to withdraw money at any time, and the loan is repaid automatically.

This banking product allows organizations to borrow money only at the right time and pay only for a certain period when the loan is actually used.

What is the difference between an overdraft and a line of credit?

Overdraft is a product similar to a line of credit.

The main differences from a line of credit are as follows:

• overdraft is only available if there are no funds in the account. The line of credit does not depend on the amount of money in the account;
• the entire amount of money credited to the current account is completely debited credit institution before full repayment overdraft The credit line provides for partial repayment
• For an overdraft, the interest rate depends on the amount of funds transferred and the period of their use. A line of credit offers different types of interest rates.

What is the difference between a loan and a line of credit?

A loan is a one-time agreement under the terms of which a certain amount is lent at one time. A line of credit involves receiving borrowed funds multiple times.

A line is a kind of continuing loan.

In this regard, it is this, and not a simple loan, that companies choose to finance their activities.

Line with an issuance limit and a debt limit: the main differences

A line with a withdrawal limit involves a specifically agreed amount of funds to be issued to the client. For example, it is stipulated that the borrower has the right to receive no more than 500 thousand monthly.

When concluding an agreement with a debt limit, a limit is set on the maximum possible debt. For example, a legal entity cannot borrow more than 500 thousand. Thus, at the moment when the client’s debt amounts to 500 thousand, additional funds are not issued.

Conditions for providing a credit limit

A revolving line of credit assumes that the borrower uses funds on loan within the limits established by the agreement. The size of the limit is set in the contract.

The client must provide documents proving his solvency.

Loan currency

This type of lending can be provided both in Russian rubles and in foreign currency. To receive loans, for example, in dollars, an organization must open a foreign currency account.

Debt limit

The debt limit presupposes a certain amount of debt that the client is entitled to have. If this amount reaches limit value, further lending is not possible.

In each specific case, the bank sets a debt limit.

Deadlines

A revolving line of credit is a long-term loan; as a rule, it is provided for a period of 5 years.

If the borrower does not fulfill its obligations, the bank has the right to stop providing the loan and thus terminate the term of the loan agreement.

If both parties agree, the loan agreement can be extended for a new term under the same conditions.

Fixed or floating interest rate

Two fundamentally different interest rates may be provided:

• fixed;
• floating.

A fixed interest rate means that the borrower always pays the same interest.

The floating rate consists of two parts: fixed and variable. The second part depends on the client’s debt and the loan amount.

Commissions

The bank takes its own commission for the client’s use of borrowed funds. Tariffs are described in tabular form.

Security

To obtain a loan in the largest amount, an organization can provide collateral. Such security may include:

• guarantors;
• real estate pledge, Vehicle, goods in circulation;
• bank guarantees from other credit institutions.

How to open a line of credit

To open a credit line, the bank requires borrowers to provide a certain package of documents. It varies slightly depending on the client's status.

Legal entity

The organization must submit to the bank:

• copies of constituent documents;
• accounting and financial reporting;
• general information about the activities of a legal entity.

Specifics for individual entrepreneurs

The bank cannot give individual entrepreneur large credit line. Therefore, to obtain a loan for an individual entrepreneur, it is necessary to provide substantial security, as well as a long-term plan for further development.

To an individual

Strictly speaking, ordinary citizens cannot be provided with a line of credit in the classical sense of this term. The bank issues to individuals credit cards with similar capabilities.

Credit card with revolving limit

This is the product for individuals closest to a line of credit. With this card, a citizen gains access credit account. The agreement establishes a maximum limit for spending borrowed funds, as well as debt repayment terms.

Debt repayment procedure

Debt repayment can be made in any way convenient for the client:

• through a bank branch;
• through transfer from card to card;
• using electronic services (for example, Sberbank Online);
• through Russian post offices;
• using the Golden Crown service.

When using third-party services, lending institutions may charge a commission!

How to increase your credit line

In practice, a situation may arise when the client needs a larger loan amount. In this case, you can contact the bank branch with a request to increase the size of the credit line.

As an attachment, you must submit documents indicating the borrower's solvency.

If the application is approved, the contract will be amended accordingly.

What if the bank closed the line?

If payment is not made on time, the bank has the right to close it. Often such actions of a credit institution cause serious harm financial stability client-organization.

To resume lending, you must first pay off all debts. Sometimes you have to take out loans from another bank to do this. After this, you can contact the bank branch with an application to open a line.

Advantages and disadvantages

An undeniable advantage compared to a conventional loan is the fact that to open a credit line you only need to go to the bank once, collect required package documents and gain access to long-term loans.

The procedure for calculating interest is favorable. Interest is accrued only on the amount that the client takes for his needs. Such conditions can save a significant amount of money.

But this type of lending also has its drawbacks.

1. Often the agreement stipulates that the one-time disbursement of funds (tranche) is small. Therefore, despite the general large limit, the client can use not a very large amount at a time.
2. Most often, collateral is required to open a line. In this regard, it is not always convenient for organizations to pledge their real estate as collateral.

Thus, each client, having studied the terms of this product, must come to the conclusion about the ease of use of this particular type of lending.

May 15, 2012 18924

Applying for a loan for plastic card by opening a credit line - convenient way obtaining a loan, allowing you to use credit funds when they are needed and pay interest only on the amount that was actually spent.

However, if you decide to take out a loan on a card, then you should think about which method of providing a loan to use. Banks, as a rule, offer two types of credit lines: non-renewable or revolving.

A non-revolving line of credit involves the ability to withdraw a certain amount of money within a certain period. To better understand the issue, let's look at a specific example.

You have opened a non-renewable line of credit for 10 million rubles with a loan period of 6 months. This means that within 6 months. You can withdraw this amount in installments or in one lump sum. For example, today - 600 thousand, tomorrow - 4 million, in a month - another 5 million, and after 5 months - the last 400 thousand.

Thus, over the course of 6 months you can gradually spend 10 million rubles. Interest will be accrued from the day you first withdrew money from your credit card, even if it is 1,000 rubles. However, interest is charged only on the amount spent.

In addition, you should remember that after 6 months you will no longer be able to use the money, and the unused balance will go to repay the loan. Repayment of the principal debt on the loan begins after the end of the loan period; before that, you only pay interest on the loan.

A revolving line of credit provides greater opportunities, because... allows you to reuse credit funds within the established limit.

The term for loans with a revolving credit line is usually from 1 to 3 years, but everything depends on the conditions of a particular bank. As in the first case, you can don't spend all your money at once, and use only the amount you need. Interest is calculated only on the amount used.

However, usually, in addition to interest, you must pay a certain amount of the principal each month. And due to this, you get the opportunity to use again this amount. For example, this month you contributed 500,000 rubles towards the principal debt. This means that you can again withdraw these 500 thousand and use them at your discretion.

So, for some time you have the opportunity reuse credit funds, and then comes the repayment period. As a rule, it lasts 1-2 years, during which you can no longer use the money, and you simply pay off the loan.

It is also worth noting that some banks set maximum size the total amount of funds provided to the borrower, which is technically impossible to exceed.

Advantages revolving credit line:

1. possibility of multiple use of funds;
2. no need to apply for a loan every time you need money;
3. a longer period of provision compared to a non-revolving credit line.

Along with the advantages, there are also flaws:

1. There is a high temptation to use up available credit funds - in fact, by spending previously paid contributions towards the debt, you take out a new loan from the bank every time.
2. Shorter loan repayment period compared to a non-revolving line of credit. In the case of a large amount of debt, this can be problematic.

So, a revolving line of credit is more suitable for those who need money often and in small amounts. A non-revolving line of credit is an excellent option for those who have planned large purchases, but have not yet decided when exactly they will make them and how many of these purchases there will be.
Articles

The ideal solution for managing your company's working capital.

Bank line of credit- this is an opportunity for legal entities use credit funds Anytime within the established limit and loan terms.

Types and advantages of credit lines

We use two forms of lending when opening credit lines to legal entities:

The bank can open either a revolving credit line with an issuance limit and a debt limit, or a non-renewable one.

Advantages of the J&T Bank credit line

• Just one application. By submitting an application for opening a credit line just once, you have the opportunity to receive credit funds over a long period of time;

• Flexible approach to the issue of loan security. You can provide any real estate, vehicles and equipment, goods in circulation, or securities as collateral for a loan.

• Money is always available. You always have reserve funds in case there is not enough money in your account to pay suppliers of goods and services;

• Flexible loan payment options. Choose from a range of payment options to suit your needs and budget. You may pay only the interest on the line of credit in one month, and even more than the monthly principal in another. At any time and without penalties;

• Use your line of credit again and again. As soon as you repay the portion of the loan amount you have used, it immediately becomes available for reuse. You can use the renewed part of the loan at any time when you need and without having to re-apply each time;

• We increase the size of the credit line. If necessary, the size of the credit line can be increased. The initially established amount of the credit line can be increased based on your positive credit history at J&T Bank;

• No fees on unused loans. You do not pay interest on the portion of the line of credit that you do not use.

Credit line terms

When determining interest rate we take into account financial position the applicant, the size and quality of the security provided by him.

Opening and securing a credit line

After reviewing the application and making a positive decision, the bank sets the total loan amount in accordance with the borrower’s application and his financial capabilities. After opening a credit line, the borrower receives the right to use funds within established limits throughout the entire loan term. At the same time, he is obliged, according to the agreement, to regularly pay for the use of the loan and/or repay the current debt.

Loan repayment procedure

The frequency, size and timing of repayment of the principal debt under an open credit line are determined on an individual basis. The loan debt can be repaid in a lump sum at the end of the loan term or repaid according to a schedule agreed with the bank. Interest payments on the credit line are made monthly or quarterly.

Requirements for borrowers

Credit lines are opened to any company that has an existing and profitable business that has been operating for at least 12 months. Credit lines are also available to private entrepreneurs.

Wherein:

• The client has no overdue debts to tax and other government authorities;
• the client has no overdue debts to the Bank or other credit institutions;
• The company is not at the stage of bankruptcy or liquidation.

Preferential conditions for opening a credit line for small businesses

We are ready to consider the possibility of providing preferential terms to open long-term credit lines for small businesses in connection with established partnerships with the Moscow Small Business Lending Assistance Fund, under whose guarantee loans of up to 50% can be issued .

Securing the opened credit line

We take a flexible approach to the issue of loan collateral. The following can be accepted as collateral:

• Non-residential and residential real estate
• Motor transport
• Equipment, mechanisms, machines, production lines
• Finished products, goods, materials in circulation
• Securities

In addition, we accept personal guarantees from business owners, top managers, as well as third companies. A combination of pledges and sureties is allowed.