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Line of Credit [LOC]

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Line of Credit (LOC) is a type of revolving credit, with preset borrowing limit that can be used at any time till the line of credit is active.

The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit.

Most lines of credit are unsecured loans. The borrower does not promise the lender any collateral to back the LOC. One exception is the Home Equity Line of Credit (HELOC), which is secured by the equity in the borrower's home. From the lender's perspective, secured lines of credit are attractive because they provide a way to recoup the advanced funds in the event of non-payment.

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